Space and budget are a universal problem, and you can drive this point home to your FH by showing him the averages of what brides and grooms are spending in your area -- go to
www.costofwedding.com and plug in your zip code. It will then give you a report of the average $ spent in each area of weddings. Showing him great materials like your caterer's headcount prices will also support the reality of what the wedding will cost. (Sounds like you've done this already -- good move!)
Now as for the guest list, that's a universal problem too. So here's what I suggest, since your groom is admitting that these people aren't very close to him. Create a Tiers System for your guest list. Tier A is your bridal party and closest relatives. Tier B is aunts, uncles, cousins and best, best friends. Tier C is more distant relatives and colleagues, bosses, and very close friends you see often. And so on. When you sit down and work the numbers of having X number of Tier A and Tier B, then it starts to get pretty clear that Tier G and Tier H are neither essential nor possible. He may just need to see the guest list in a different way to illustrate both how people on the guest list come with a big dollar sign attached, and how YOU'RE assigning your more distant friends and acquaintances.
Hopefully these steps will get him to agree to cut down his side of the list...
Good luck!
Sharon Naylor
Author of 1000 BEST WEDDING BARGAINS