MIL needs to mind her own business. This is your wedding, not her wedding and your fiance (not you) needs to tell her that or to basically drop the subject.
I don't think you need to make a public declaration on it, shrine or announcement he's not there (everyone knows already) because it make it a memorial for him at those moments instead of a celebration for you but just simple things that are meaningful to you.
My dad died when I was in my young 20's before I met my husband, so I understand your position in it. I didn't get that walk down the aisle, I had picked my uncle (my mom's brother) but he got hurt a few weeks before my wedding and couldn't do it. Oddly enough, my father-in-law ended up doing it and in the end I'm actually so glad I picked him. My FIL has been my 2nd dad, my in-laws are awesome, they refer to me as a daughter or sister, not an in-law.
As far as most people didn't know your dad... all my side of the guests knew my dad.
Here are subtle ways I figured out how to acknowledge him without drawing too much attention to it:
Invitation: I figured out a way to put my dad's name on my invitations. We were paying for our own wedding but wanted to issue the invite from our parents anyway, but dead people can't host anything so we issued the invite from ourselves and under our names we had daughter of Mrs Joyce and the late Jerry XXXX and then son of Dr Janice and Mr Michael XXX. Since my dad was dead, we put our mom's names first, plus a professional title goes first regardless gender (my MIL is a physician).
Date - I got married on what would have been my dad's birthday, the day of the week for us just happened to line up. Really only my immediate family and my dad's siblings knew that.
Bouquet - I had a bouquet buckle/charm on my bouquet that had his picture in it. I had ones made for my brothers too.
Centerpiece - I had a memorial candle made up that was at my mom's table, it was similar to the rest of the table's centerpieces. Unless you got up close to it, you couldn't tell it was different than the other ones. My mom still has it.
Father/daughter dance - I opted out of that, I didn't have any dance in it's place or do any announcement of it. My husband still had his mother/son dance. I wasn't taking that from them because I didn't get it, even though they both offered to nix theirs too. I knew his mom probably looked forward to that his whole life so I couldn't take that from her.
Edit - I attended a wedding this weekend where the bride doesn't have her dad anymore and the groom had a sister who died (young) so they found ways to honor both of them.
Reception - they had a table of people no longer with them and their pictures.. her dad, his sister, grandparents and their dog. I didn't hear anyone say anything negative about it.
Father/daughter dance - she started out dancing with her step-dad and after about 30 second, they had everyone come dance with them who was there with their dad.