To what extent would your kids be exposed to your brother's homosexuality? Would they know its his lover, and not just a friend? That seems to be the critical question - if your brother is the type who is all up in everybody's face, "I'm gay, and you'd damn well better support me," then I'd suggest that you've got a problem.
But if he isn't -- so that the moral values you're trying to teach your kids isn't undermined by Uncle Bruce, then I'd say you should go. You can't pick your family, and right now, what he needs is to see that, even if your religious beliefs tell you that his actions are just wrong, that doesn't change the fact that he is your brother-in-law (and her brother), and you love him anyway.
As I see it, the kids are the deciding factor. What will they be exposed to?
A good analysis, yes.
Here's the problem -at times he's in your face. For example, his first demand he either be allowed to bring his 'friend' or he wouldn't come to functions.
It was only after we came back and said we wouldn't come if he DID bring his friend that he cooled it around us. In fact, as my wife and I have discussed, if he had just showed up with a male friend we probably wouldn't have said anything. We could always have claimed 'plausible deniability.' We already were fairly certain what was going on, but we didn't know for sure until he made a big deal of it. Once he did, we felt we had to take a stand.
But there's another problem. Sooner or later, the kids will find out. My oldest son, who's 18, has already figured it out. What happens if we raise them to see homosexuality as serious sin, and then they find out that 'well, mom and dad didn't really mean it since they've condoned it all these years.'
Seems like your family is selling out to the PC lifestyle, to heck with your faith.