Swingsets are very resrictive in my mind. A playset that includes a variety of activities is more the style of what I would spend the money on. Something that a 7-8 year old child can find interesting and also a toddler can be safe on.
To be honest I would start smaller. But some other fun items they could play on/in such as a small kitchen set, a water table, some sort of sand box that has a tight fitting cover to keep strays animals and bugs out of it, some bikes/trikes, ours like his Hot Wheels Mountain that stays outside, a climbing cube of some sort from a company like Step 2, roller skates, balls and other sports equipment, many other items can be incorporated into a fun play area that is age appropriate for both ages.
The reason I would not go towards the playset is the fighting with the hubby. The age difference in the kids ages. The danger that a playset would be to the toddler verses the boring factor to the older child. Not many features on a full size set can appeal to both ages. The little one is going to want to climb to the top just like big kids. The big kids are going to get really bored with a small play set that offers much less than a playground in a park.
Offering alternatives to going to the park to play is easy and affordable. As the kids grow you can sell or trade the outgrown equipment and buy newer replacements. We have a large playset, 3 swings, long bumpy slide, rope ladder, rope swing, huge fort, large area under the raised fort for the outdoor play kitchen, etc.... It was a constant battle when the 4 year old was younger. We were constantly redirecting him to play in the Little Tykes barn, on the climbing cubes, the 2-3 step ladders, the riding toys, etc...it was not fun to go outside. We were given the playset and it is used daily now. We added handles on the 2 ladders, added a rock climbing wall onto one side of the fort, added periscopes and steering wheels, and lots of other things like the swinging bar instead of the seat for 2.
Finding the right balance is easy if individual parts are age appropriate and interesting. As for the grass and other complaints from hubby...plan on making a play area. It can be dug out and resurfaced with heavy grass, sand or pea gravel. These are rather inexpensive surfaces for kids to fall on from height. If you wanted to you could even put a border around it to set a boundary for toys and play time. That way it would not be a free for all play yard and hubby could have the nice backyard he wants and you could have an alternative to going to the park every day and only go once or twice a week.