Coco Malec, let me first say that you are not being ridiculous and is is as sad to me as it is to you.
Unfortunately, your parents believe in giving gifts with strings attached. That is the first problem. They should be willing to give you the money with having to say it is "our money, do with it as WE please!" That is unfair and it is not a very nice thing. So I applaud you and your FI for doing what I think is the right thing, which is turning down the money and doing with YOU, the both of you, want to do. I know it must have been a terribly difficult thing to do, since you had already relied on that money to finance your wedding. But I believe, it is more important to have a day and experience that you will cherish forever, instead of having one that you will look back on and resent in the future.
It is very unfortunate that your parents are acting this way, however, with your stand of independence they will see that you are serious about having your wedding your way and they have a choice to conform or to miss out on of the most important, if not the most important day in their daughter's lives. Trust me, your family will regret their behavior in this sooner or later. Sometimes it is difficult for people to backtrack after they have made a "grand stand" about something. That is what your parents will have to do now since you have proven to them that you will not be pulled in all directions like a puppet on a string!
Many brides on here have stories of their families giving them a lot of grief about having a destination wedding. And they will all tell you the same thing, "it's our wedding and we did what made us happy." I say take that advice and run with it. Your parents will come around, and if they don't they will be missing out. You cannot allow them or the rest of your family to ruin what is supposed to be a wonderful experience for you. Your parents should know by now that you are not like your sisters (so I have gathered from your post). You are independent, carefree and adventurous. Therefore, you will plan your wedding not in the conventional sense but in your own independent and adventurous way.
My advice, you will never get this time back again. This moment is all that you have. Enjoy it, embrace it, love it. It's your wedding, your time, your moment. So hold on to it and do it in style. Your style!