Howabout suggesting that the four of you meet up somewhere nice for a meal and discuss things. Your SiL can then explain how his family works and what his oarents are doing, he could tell you why he thinks the bedroom in your house should be cleared, for example and you can explain to him that not all families are alike and this is the way you see it - and try and reach an agreement.
OK, I know, and pigs might fly, your SiL is not that sort of person. However, I do think you need to stand up to people like this. Decide what you are happy to do - put a travel cot in the room your DGS can sleep in when with you etc. and then say, thus far and no further, we have our own lives to leave.
Written into any relationship with our children once they grow up, and especially once they are in a partnership, is that the relationship should be at arms length. First your child and their partner look to each other - and we must stand outside and accept the decisions they make.
However a line needs to be drawn when they start dictating to you how you areto live your life. The line is there, no matter how it affects your relationship with your grandchild because at the point he starts telling you what to do, the relationship has become abusive and you must step away. He is using your grandson as a weapon in a game of emotional abuse.
Like others, I worry also about your daughter and the dangers that she too may find she is being pushed into a coercive relationship. You could find yourself, all of a sudden seeing your grandson 24/7 wen the relationship breaks down and your daughter and grandson, seek refuge with you.