I think the more consequences the better. Your MIL has it spot on in my opinion.
Affairs are VERY HARD to BUST up from the outside. You CAN wait for them to fall apart ont heir OWN internally, but it takes a LOT LONGER.
Get the exposure over with now. Him being intersted in what you are doing is not necessarily a good sign either. He wants to know what YOU are doing so he knows if HE is covering his tracks well... he is "counterspying" to make sure he has the upper hand... it happens all the time
I woudl'nt wait fot the retro. I really don't see it as a huge marker one way or the other. Its just an event the two of you were booked to attend.. and he may chagne his mind by then anyways and you have wasted three weeks waiting only to have him not show up.