I believe that the weddding rehearsal dinner is to be more of a quant affair, with the wedding party along with the parents of the bride and groom. It is a good time to get to know each others families a little in a smaller setting. The party is after the wedding. My son has also included the grandparents, but there is only one set of grandparents. The groom needs to talk with his parents and delicately explain their feelings.
