A little late adding to the discussion, but here it goes....I agree with your DD, I think you need to do 2 parties. One just for school or your child's close friends and cap it at a certain number (and NO siblings). This is the 'big deal party' themed or whatever you want to do. Have a different family / people who are like family party and keep it simple. Kids playing, adults socializing, no 'big deal birthday party stuff', just a cake and whatever food you feel like serving. If there is some overlap with the kids, so be it. Make sure the family knows not to get another gift.
We do parties like OOG.