For goodness sake! Your Father-In-Law would have probably told St. Augustine he's wasting his time by repenting after his conversion and that he may as well keep on sinning! If St. Peter had listened to your Father-In-Law he would have hung himself alongside Judas after he betrayed Christ or else resigned himself to the life of a miserable reprobate sinner.
I'd rather be a hypocrite and at least stand up verbally for what I know is right than to not only commit habitual sin but try to justify it publicly. The latter state is worse than the former. Of course the best state is to practice what you preach. But according to your f-i-l, what's the point? If you decide you are on the wrong path and make a change, you are still a "hypocrite" for what you did before you saw the light? That's insane.
Your f-i-l no doubt loves his youngest son, but cannot separate his natural emotional attachment to this son from his son's sinful actions. Thus he takes his example from the Post-Conciliar Papal/ Episcopal reaction to priests committing greivous sins and causing scandal and does nothing pretending like it doesn't matter.
The primary reason he reacts so strongly to your husband is because your husband stirs up his own repressed conscience which agrees with what your husband is saying. Your f-i-l is in comfortable denial and wants to keep it that way. Easier to repress his conscience than to tell his son he is on the wrong path and risk upsetting him.
The "hypocrisy" argument is a red herring and a smoke-screen. I'd try to get the conversation on the level of objective right and wrong and away from subjective examples of weak human behavior. Use the example of Christ if you must use an example.
Here is a good start. The scribes and Pharisees were hypocrites par excellance
as they still spoke the Truth even though they didn't practice it. Christ still said to listen to them.
1 Then Jesus spoke to the multitudes and to his disciples, 2 Saying: The scribes and the Pharisees have sitten on the chair of Moses. 3 All things therefore whatsoever they shall say to you, observe and do: but according to their works do ye not. For they say, and do not. 4 For they bind heavy and insupportable burdens and lay them on men’s shoulders: but with a finger of their own they will not move them. 5 And all their works they do for to be seen of men. For they make their phylacteries broad and enlarge their fringes. 6 And they love the first places at feasts and the first chairs in the synagogues, 7 And salutations in the market place, and to be called by men, Rabbi. 8 But be not you called Rabbi. For one is your master: and all you are brethren.