We are not only in the same house as when we were still active, but we are only a couple miles from the Kingdom Hall and one of the closest territories for our former congregation. Both sets of parents, as well as my brother, all live within a couple of miles from our home. My family is very well-known and well-respected among the JWs in the area, as is my husband's. His uncle is "anointed," and I'll tell you NOBODY questions that he's the "real deal." Growing up, my family was highly visible, with many assembly and convention parts. My brother had 500 people at his wedding and it was not a teenage party, these were all JWs in good standing, adults, etc. We invited about 60, and ended up with around 200 at our KH wedding.
I don't know what island you're on, but if you're in either Kihei or Kona, it's very likely you've met my parents or my brother.
We have almost no contact with any former JW "friends," although occasionally my mother will send one of her Witness friends to me for massage therapy. They are well aware that I am not a JW, but I doubt they know any of the rest of the story because they always treat me with respect and never try to preach to me. I wouldn't tolerate it if they did.
But we are on the outskirts of a metropolitan area, with over 2 million residents, so we rarely see JWs, except at a distance. Twice now, they have knocked on our door with the magazines, but they don't know me, AFAIK.
Neither my nor my husband's family are hypocrites. They are the "good" JWs, who do not lie, cheat, steal, lie, protect molestors, lie, lie and lie. (spam spam spam and spam.) They are true believers, who are giving the good talks, conducting the WT study, having "progressive" bible studies, and to give them credit, they are pretty good christians, in spite of their religious affiliation. If I expressed apostate views however, my own mother would pull the trigger. Of this I have no doubt. Fortunately, when we decided to leave the JWs, we landed here and took the advice of posters more experienced than we were, on how to pull off a successful fade. So far so good.
We had dinner at my folks' house last Friday. It was pleasant and fairly relaxed. Yeah, there is the "elephant in the room" - their religious views, a topic we don't discuss but are always aware that it is there. We get along okay in spite of that.
Personally, I think it is often harder to come to an "understanding" with a hypocrite than with a faithful "true believer." The hypocrite is always a moving target. Your wife's daughter-in-law does not sound like someone who is inclined to make much sense. But, as you say, it is a small community- island life- so she's not going to be able to keep the grandson away forever.