I don't think mainstream Christian morals are necessarily a bad thing to raise a child by (obviously the anti gay bigotry needs to be dropped and largely is now by lots of Christians, strict no sex before marriage is also pointlessly silly for most people) but in general its not too bad. Labeling a child as belonging to some religion is a bit off though - would be better if you were happy to explain that mum is a Catholic, Dad doesn't believe, introduce the kid to religion and let him/her make their own mind up when they're older - a baptism probably wouldn't do any harm and would perhaps pacify her family at least but maybe agree to give the child a completely free choice regarding confirmation etc... (you never know - he/she might even opt to go through it just for show/to keep the grandparents happy)
The reality is that as we continue to advance technologically we'll probably see more and more people shaking off these beliefs... but we'll likely also see a lot of people going through the motions to keep family members happy.