If non-kosher food is being served and it’s not a formal setting where e/o gets their own portion, then all the food has to be kosher.
Why? It’s up to the parents to supervise the kid and watch what the kid eats. It’s certainly not the fault of a 7 year old! The situation in the OP could have been prevented it the parents had been paying attention. We’ve gone to many events that included food with family members who are not frum, and we’ve never had this problem.
So either you want to be Frum or you want to be part of your Freye family.
You make it sound like they MUST make a choice between one or the other. They don’t.