Well, I have a financial problem!!! (kinda long) updated with letter to FMIL

my Fh just found out that he didn't get a job that he wanted,and it was going to help out a lot with bills we have.. So as for the wedding, it kind of had to be put on the 'back burner'.. My fh got so upset and called his mom (behind my back) and told her that we had to cancel the wedding.. HIS MOM FLIPPED.. she said no, she didn't have a big wedding for her first wedding,and no way,is her son not having a big wedding.. So fi told her that we can't afford it.. she said she would pay for the wedding.. well, for the hall.. HOLY COW!!!!!! that's like $16,000 alone.. We'll pay for flowers, dress, inviations, dj.. My problem is.. I am very thankful for this.. But I can't help but feel really guilty.. That's a lot of money,and it's tradition that the bride's mom pay for the wedding.. i feel bad.. My mom is helping, but not that much.. She is giving what she can give and that's a third of what fi mom is giving..
My fi said that we should let her, because she will be upset if we don't have the wedding, and he said he really wants to have the wedding.. anyway.. what would you do? would you let your MIL pay for the wedding, or would you just try to do it yourself??