I agree with Veronica's post, and I agree with how you are handling the situation. As someone who totally understands about the money situation, your friends and family have to understand also. My FI and I are on one income, HIS. I have student loans, and we have to live. With that said, we are having a small wedding, and I am not even sure about the AHR after cause that is just more money. For those who are not invited, we will definitely explain the situation, but that is all we can do. Most people know that I have been unemployed for almost a year, so if they don't understand that we are having a small wedding because that is what we can afford, then they are selfish and are only thinking about themselves and a party, instead of me and my FI's happiness and future (not to put ourselves in unnecessary debt).
So I think your way sounds like a very good plan. People are going to be upset nonetheless, but there is nothing you can do. And you are having an AHR, they can definitely come and enjoy themselves then, and congratulate the happy couple.