I haven't wanted to wade into this thread until now, but I have to say that I agree completely with this. I admit that I do not have any severe food allergies, nor have I lived with anyone who did. So I do not claim to understand what life must be like when you do have to deal with such things. However, I do get severe migraines. One of my triggers is an ingredient that is in many inexpensive perfumes commonly sold in drugstores. As much as I would love to be able to wave a magic wand and erase those perfumes from the face of the earth, I know that I can't. I would never demand that people stop wearing them. If I realize that someone near me is wearing one, I move away from them. If my reaction was so severe as to be debilitating, I wouldn't put myself into situations where I couldn't move away from the scent - so I suppose I would not be able to fly anywhere. It's unfortunate, but I realize that the vast majority of people don't have a bad reaction to those scents, and my right to avoid the scents does not trump others' rights to enjoy the scents. Certainly if I was often in close quarters with someone I would ask if they would mind not wearing the scent around me, but I'd never expect or demand that they refrain.
And frankly, even if I did feel I had the right to demand that everyone else refrain from enjoying something because I can't be around it, I'd never trust a group of strangers to actually comply even if they said they were going to. If I (or my child) had a life threatening allergy to something, I would not knowingly trust my (or my child's) life to a group of strangers. Maybe they aren't as vigilant as I would be about checking product labels. Maybe they don't really think a small amount of peanut dust would actually hurt us. If a small amount of something could actually kill one of us, I would not be willing to put either of us in a situation where one careless stranger could kill us. I would want to remain in control of our health and safety, and I can't do that if I put myself into a situation where I can not control our surroundings. Hopefully the vast majority of strangers would be willing to alter their snacking habits in light of the fact that it could be a life or death issue for us, but I'd never be willing to gamble our lives on that!
I would certainly be willing to give up peanuts temporarily if someone around me was allergic. I would do so happily if they asked nicely, and grudingly if they demanded. Realistically, though, I think that the ultimate responsibility to avoid peanuts lies in the person who is allergic, not the rest of us. If an allergy is that severe, it might only take one person who isn't willing to give up their snack and the allergic person could be facing a serious health crisis. There are plenty of people who are not willing to be inconvenienced for the sake of a stranger. I would be shocked to find a flight where there wasn't at least one person like that. Trusting an entire group of strangers to protect your health seems naive, at best. I think unless I could directly control the situation, I'd have to assume that there were going to be peanuts present wherever I went. That outlook seems safest to me, anyway.
Regarding the OP, I think separate dishes are the best way to go. I do think it would have been much more polite for the nephew to have asked for the recipe so that he could alter it for himself. I definitely think it would have been a bad idea to make the dish with Splenda instead of sugar. Besides the fact that it wouldn't have worked right, there's also the fact that many people can't eat Splenda. It is another of my migraine triggers. When I know it is in something I just don't eat it. I absolutely hate the trend lately of putting Splenda (or other artificial sweeteners) in things without making it apparent. I have to read labels or specifically ask the ingredients before I eat anything these days, because "everyone can eat Splenda" and so no one thinks to warn people when they've used it.