Count me among those who wonder how it took you 45 minutes to explain your reasons if "in laws and traditional etiquette" are the only reasons you've got. Especially since it sounds like you don't even understand the reasons behind the etiquette in question.
The babes-in-arms exception is standard practice, even in the most formal venues, due to the nature of the various stages of child development. I have a three year old right now that I can't even go into McDonald's with because of her rambunctiousness; but when she was six months old or so, I dined quite comfortably with her in some of my city's finest establishments, and nobody raised an eyebrow. Furthermore, the extreme dependency of an infant means that there can be no social expectation on the mother to leave it for any length of time. The fact that other mothers are willing to leave their babies - or even the fact that the mother herself, on her own initiative, does so in other situations - does not license the inviter to demand that she do so for their particular event. That would be an invasion of privacy and of their right to make their own family arrangements. (Let alone 45 minute phone calls to underscore the demand!)
In a nutshell: by disinviting the baby, you explicitly disinvited the mother herself, even if you yourself were too ignorant of etiquette to realize it at the time. That's just how the rules of etiquette around babes-in-arms work. And needless to say, to invite one member of a married couple but not the other is just about the rudest thing you can do - in most circles, quite enough to end a friendship.
IOW you had already completely stepped in it even before you went for the gold medal in tackiness and inconsideration by getting on the phone to have it out with her. And all in the name of "etiquette"! Priceless. :
Look... presumably you came to our community to get our perspective. Ask an honest question, get an honest answer. If you feel you're getting slammed, it's only because from our perspective, you are truly out of line. You seem to have wanted us to say "oh yeah, I would never do that! our husbands do as they please! she must be some kind of shrew" and you are, somewhat understandably, frustrated to hear very much the opposite.
Also bear in mind that besides being mothers, most of us are further along in the life cycle than you, and much more familiar with how these things work in general even aside from a mother's particular perspective. Indeed, many of us are closer to being the ones hosting the major family events (if not quite weddings, at least bar mitzvahs and confirmations, major holiday gatherings, etc.) than to being the young people for whom they're hosted. This may be part of why we are so unsympathetic to the appeals to your in-laws' supposed authority - as parents, we know firsthand just what kind of unsavory attitude it takes to set such arbitrary limits, and you don't look very big for going along with it. Of course, it's your own choice not to cross them if you don't want to. But you have to take responsibility for that choice, and not spread the burden of it onto third parties. "I'd love to have you, but her parents are calling the shots" won't buy you any sympathy, and not coincidentally, it also violates etiquette by airing dirty laundry. You can't have it both ways; if you're going to follow your in-laws' rules of "etiquette" (which, as I've noted, differ substantially from standard formal etiquette), then your friend and his wife are more than entitled to follow the rule of standard etiquette which is that they are under no obligation to accept exclusionary invitations.
Etiquette is supposed to be about helping people relate to each other more comfortably, you know.