Well in my family (quite big, lots of cousins), weddings are almost always at the bride or groom's parents house.
I got to thinking about this and the way I see it is that if you have the reception someweher else than your own house, it also sort of accentuates the situation - it make sit more special. I guess you could also link this to the uchi/soto concept...

Isn't it taking advantage of their kindness ?
Didn't you sort of answer this yourself? If you invite someone to your wedding, they expect you to also take part in their wedding, too. So you kind of pay back, right?

Oddly enough, I happened to stumble across a book about japanese weddings at the library today.
(Walker Edwards: Modern Japan through Its Weddings, 1989) I just flipped through it but I found the following
points might may explain the wedding fuss:

In the late 1940s people could have low cost weddings, funerals etc by paying a monthly fee (for the next ten years
or so) for a gojokai. The gojokai would then give altar decorations etc for the members' use. Previously the decorations etc
were owned commnally (for example by a neighbourhood) but in urban areas it was common to rent the stuff from an undertaker.
So the gojokai merely expanded the service from funerals to weddings as well. Not to even mentiont he fact that people's
income probably wasn't too great after the Second World War.

In the 1960s the number of this kind of enterprises increased and they also began renting their own wedding halls. The
expansion of their facilities also meant that they were able to produce more services than before. And the rest is
history ;)

Edwards gave a couple of points to why people have so lavish wedding receptions instead of saving money:

1) you get a chance to shine for one day

2) there isn't enough space to host all the guests at your won home

3) economic prosperity

4) you can get a wide range of services through a single organisation

5) people are exposed to a certain picture of what a wedding should look like through media (so I guess the whole thing just
sort of fuels itself..)

6) the wedding industry is able to produce services that contribute to the wedding as a rite of passage

To me it was kind of funny to notice that the whole industry started out as a way to save money while arranging your wedding to
spending huge amounts of money on it!

Don't get me wrong, I'm in no way saying that all weddings should be the way they are in Japan - I'm just trying to figure out the thinking behind it ^^; As a student, I would have no way of paying loads of money just to go to someone's wedding. And if they asked me to pay, I'd be probably be offended because they would know I'm a student and not consider my situation at all.