Wow! I'm amazed at what nerve some people have! I couldn't imagine asking for something like that! Matter of fact, when people who are invited to my DS's b-day party call & ask me what they should get him, I always just say "it doesn't matter, what matters is that you are there to celebrate with us." Actually, I MEAN ALL THAT TOO!
Anyway, I would definitely send the cool bike & you can always enclose a note saying "since everyone will probably give money, I thought it would be fun for my nephew to have at least one gift to open & play with!" Who cares if it offends your BIL/SIL! They obviously didn't care what was "proper" or not when requesting cash for furniture!