Yes, you should include the out-of-town guests, etc. If you've determined that you can afford X amount for the rehearsal dinner, then I'd suggest paring down the rehearsal dinner plans to something that can be done for X amount. YOU decide where it's going to be, however, and YOU have complete control over the menu, etc. Yes, it's polite to ask their input, but ultimately you have complete veto power.
You could have BBQ brought into the church fellowship hall very inexpensively. This would allow you to bring in your own desserts and drinks, which could equal a big savings. Perhaps you could ask a couple family friends to help set out and serve. Were you planning to serve alcohol? This isn't a necessity, and cutting it out could really slash your budget. Since the wedding will be formal, I think people would enjoy a casual evening before.
I think the problem originated from taking on some of THEIR financial responsibilities before making completely certain you were good for YOUR responsibilities. Yes, it was very nice of you, but it doesn't mean that they're now obligated to pick up a portion of the rehearsal dinner tab. If I were the bride's parents, I would assume that when you said "yes" to paying for the previously mentioned items, it meant that you were able to pay for the rehearsal dinner PLUS those items. That probably would've been the time to say, "We'll be glad to pick up the cost of ____, but if we do it means that the rehearsal dinner must be rather simple."