Haven't read the other responses, but I'm agnostic, my husband is lapsed Christain, and both our families are Christain. At the minute there is no discussion because we live quite a bit away from both families, so the kids don't go to church as we don't go to church. Nor are they christened - both our families are Protestant so what they do is a bit different, in that the parents promise in front of the church that they will bring the child up in the ways of the church. Neither of our families would want us to make a promise like that unless we intended keeping it, so there was never any aggro about it.
We intend moving beside my family I another year or so, and I know my family will want us that least take the kids to Sunday school, and ideally attend church ourselves. I will probably end up going sometimes, as I'm not atheist, so I have no strong objection to going to church - in fact I like the community spirit that attending a church brings, and having grown up with that myself I think it would be nice to give my kids that experience too. I don't object to either of our parents talking to the kids about God either, but they will be very much allowed to make up their own minds as they get older.
I don't know what I would do about the christening thing though. I know it's different in the catholic religion, as babies who aren't christened are supposed to go to Purgatory if they die if I'm not mistaken, so I can see how your MIL worries about this a lot. I think I would probably just let her take LO to her church and get baptised so that she feels better about it, as what harm will it do really? But if that's not what you want then your MIL is just going to have to lump it - you are the mummy!