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Yes, I encountered something similar several years ago and was very uncomfortable with the situation. It is never okay to ask for gifts, much less cash gifts, so I understand your resentment. You have no reason to feel bad about being less well off than this couple, so either write them a check for the amount you intended to spend on a gift or go ahead and buy the gift and give it to them ( I know I wouldn't WANT to give them anything, but considering that it's family.......well, you know.....)
My guess is that you're not the only person that was offended by their request for money, so don't worry about it. There will probably be some folks that are offended enough that they won't attend the wedding or send them gift at all.
This type situation makes me wonder where these people come up with the ideas that they do, but I'm seeing more and more of it and it's just tacky and for the exact reason you stated. It breeds resentment and why people don't understand that is beyond me..............
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