In February 2014, I was there the entire week leading up to President's Day. We left on the Sunday morning of actual President's Day weekend. The beginning of the week was great, not a lot of crowds. The crowds arrived on Thursday and it was very packed but managable, as long as you had Fastpasses and went early in the morning. What worked best for us was to make rope-drop or close to it and do some rides in the morning before everyone arrived. And have my Fastpasses scheduled for later in the afternoon. Even with a Fastpass, the lines were crazy. I remember the worst line was the Fastpass line for Big Thunder Mountain was in the area around Pecos Bills, at the end of the bridge near entrance to Splash Mountain. Magic Kingdom was the worst.
I only get to go to WDW every three or four years, so I would avoid that particular weekend if I could, but like your sister-in-law, I am a teacher so the times I can go are limited. I loved the weather as opposed to going in the heat of summer. So,
So, to answer your questions, yes it is crowded but just right around that actual weekend.
I would go again at that time, especially since you want to go with your extended family. But for others who have the freedom to pick any week to go, I would choose another week in February or other month.