Actually, the first time I read the post I thought the sister invited her own parents - the mutual grandparents to the two little girls. My first thought was that it was awkward that the SIL did the inviting, but then I realized it isn't even the mutual grandparents.
I do find it "strange" just because I am picturing the situation in my family with my husband's sister wondering what I would feel/think/do. I have come to realize that many people (family included

) do things I would never dream of doing.
I am so happy the OP has the situation resolved in a way that makes everyone happy. I hope it turns out to be a great trip!