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By the time you get this, I'll have wasted another holiday with my in-laws. I'll have listened to their racist and homophobic jokes, fought with them when they told my daughter that she's fat, and watched my father-in-law reach down into his pants, adjust his nuts, and then continue carving the turkey without washing his hands. I love my husband, but I hate his family. Mine are either dead or on the other side of the country, so it's not like I have an alternative, but can I just bow out next year? I used to love Christmas and New Year's, but having spent the past five years trapped in a cabin for a week, "celebrating" with a group of dysfunctional, awful people, I start dreading the holidays by August. It's too late for this year, but what can I do next year? Divorce?
—Scrooge of Circumstance
Along with all the downsides (droopy boobs, paying bills, creaky knees, etc.), there are many upsides to getting older—one of them being that you no longer have to hang out with people who repulse you. A week in a cabin even with the nicest people would be pushing it, but with racist nut-rubbers? No, thanks. Next year, you have to ovary up and put an end to Christmas with the Clampetts.
While you mention that you love your husband, where is he when his family's telling your kid she's fat? He needs to shut them down, and if he doesn't, you two need to talk (meaning he has to listen). Does he find their racist/homophobic "jokes" funny? Because those are about as funny as rape jokes, which is to say they aren't.
I realize that it can be hard to blow off family on holidays, but nobody should be expected to spend an entire week with their in-laws, unless those in-laws are springing for a fabulous vacation for the entire clan. And even then, you should get your own room.
I'm assuming you've broached the topic, but if you haven't, the time to start discussions with your husband is now, while the pain of this visit still reeks of scrotumy goodness and your daughter's tears have yet to dry.
There are several different solutions:
1) He can go by himself, but that's not very fun for you or your daughter. Or, presumably, your husband. (You can't send your daughter there without you because it sounds like you're her only protector, which is so fucking wrong.)
2) You guys can all go for one night only, and stay in a hotel. But warn the in-laws that you're outta there at the first N-bomb or fat joke.
3) Since you're grown-ass adults with your own damn family, you can start a new holiday tradition that takes place in your house. You can invite them over for Christmas dinner, and while you'll still have to breathe the same air, at least it'll be on your terms. This way you can also guarantee that your turkey remains a pubes-free zone.
4) Better yet, start a new holiday tradition that involves doing something your in-laws won't be tempted to join in on. Like stuffing envelopes for the NAACP, making a "Yay, Marriage Equality!" banner, or simply reading books without sounding out the hard words.