Men and boys are not standing around comparing their genitals! Just as I am not going to sit and compare my genitals to my mother's or my daughter's.
If, for some reason, your son did ask why daddy's is different, why couldn't you just say that "doctor's used to tell you to circumcise, but that they don't anymore because it isn't necessary". I guarantee the kid won't care after that!
My mom got cut with all 4 of her births, and I won't with my birth, that doesn't make me feel like less of a woman, nor does she. Times change, science changes all the time, and we can't be afraid to admit that what was done in the past was incorrect.
As for your MIL, why is she so interested in your son's penis? This is between you and your husband and you need to tell her to butt out. What happens when she starts telling you to wean and give formula because SHE thinks its a good idea? Or she puts baby to CIO in a crib because that is what she thinks is best?
I don't understand the "Look like daddy" argument AT ALL!
I'd be traumatized if my mother came to me as a child and said, "Hey look at me (down there). We look alike don't we?"
That would be REALLY CREEEPY!