I completely understand your pain about feeling horrible regarding the animals. I am a vegetarian (not vegan) and I think about this often, but I have somehow managed to compartmentalize my pain and disgust. The people, family and friends and strangers, who still eat meat don’t think about this on any regular basis, they just don’t, for myriad reasons. It’s not my place to figure out what their reasons are. I have made my choice based upon my experience and reasoning. I cannot expect anyone else to do that.
That being said, if I felt as terrible as you do, and I completely believe that you do (because if I un-compartmentalize my thoughts about this, I feel like that too, and have had horrible bouts of sadness regarding this issue) I would first send a nice (nice might mean something completely different to me than it does to you) note to your wife’s family. It needs to be nice and polite and not patronizing. It needs to be about you, and not them. It needs to be about how you are currently living your life, and not about how they are living their lives (read: eating and serving meat).
You need to let them know that you care about them, and respect their ways (whether you do or not). Then just let them know that because you are now a vegan, you will not be able to participate in the meals with them all, and although you regret that (whether you do or not) you do not want to create any unnecessary drama or ill feelings at mealtimes, so you will not be able to join them for meals, but would like to still be included in other aspects of shared socialization (whatever that might entail in your particular case, such as games, coffee and dessert away from the dinner table, or whatever it might be) unless you’d prefer to forgo it all.
I would just stress that you make your letter as polite as possible. These people are your wife’s family, and she most likely loves and respects them, so it would be a disservice to you and she, if you were to purposely insult or hurt them. That’s not to say that they won’t be hurt or insulted, but you need to try really hard not to do that. If you feel so strongly that you think you need to tell them exactly how you feel in a way that you know is going to be upsetting to them or to your wife, please don’t. Just don’t go and let them wonder why you never show up.
You are probably going to be looked down upon, pitied, or spoken about behind your back, but that is one of the consequences of not going along with the crowd. I find myself in that boat sometimes, but now that most of my friends and relatives know (if they can remember, because they often forget) that I am a vegetarian and have some food restrictions (not to the extent that you do) it seems like I am a minor footnote now, after so many years, rather than being a huge black stain.
We live in a world (and if you are from the U.S., which I recall that you are) and a country where most people eat meat. Lots of people wear leather shoes and belts, or carry leather purses and wallets. Furniture in homes, cars, and businesses are often made from leather. You have to make a decision about whether you want to completely isolate yourself from your own society, or to learn how to compartmentalize your feelings, or how to stand up for your beliefs and be a teacher/leader without hurting or alienating other people who have different backgrounds and beliefs, or whether you want to stand up and be an anarchist and just shout to everyone about what you believe and take the consequences.
I completely understand your situation, but you will have to make some hard decisions about how you want to go forth. I wish you luck. Please check back with us and let us know how it’s going. We’re still here for you, even if you to decide to do something that maybe we would do differently : )