Your feelings are just that — yours. Flirting is one thing, but saying you have romantic feelings for your father-in-law as a way of explaining your hatred for your mother-in-law isn’t going to help. Think of the dynamics. Your husband won’t be happy with you, your father-in-law would be embarrassed at the least, and your mother-in-law will feel justifiably angry. Nothing good can come from it that I can see. Your insight that this could make it worse is correct.
Having feelings for your father-in-law that have never been acted on are fantasies nothing more. Revealing them in the name of helping your husband forgive his family isn’t likely to help and will most likely make things worse. Rather than reveal an illusion, which doesn’t have any value for healing, I’d rather see you do the only thing that is really within your control: Find a way to be kind rather than hateful to your mother-in-law. This is where you can really do something helpful for everyone. The truth about your feeling is that you are treating your mother-in-law poorly because you have a fictional story in your mind about your father-in-law. You are acting toward her in this hateful way because of the fantasy. Why not take the more mature route and find a way to not contribute to the pain in the family?
The hard work we often have in front of us is in developing compassion for those who are difficult to be with. Along these lines, I am going to recommend a Loving Kindness Meditation for you. LKM as it is known or Metta meditation was designed for the kind of situation you are in. There are people we love and people we have a hard time with. This style of meditation may be just the thing to help relieve some of the hatefulness. Here is a guide to this and other meditations for compassion.
Wishing you patience and peace,
Proof Positive Blog @ PsychCentral