Maybe you don't have to answer this question at all, at least not more than you have already done. You wrote that she asked you, "as MOH," to help with this wording, but I don't really know what that means; what's the difference between asking you "as MOH" and just asking your opinion as her friend?
It makes a big difference in my eyes, because if she just asked your opinion, she's probably asking other people, too, and you can relax; it's not your problem. You already gave her some info, and that's plenty. But if she is somehow communicating that this is your job as MOH, then I think she is not being fair to you, and I go back to my original advice.
If you do say something more, I vote for the less is more approach most others have suggested. "Sorry, I just can't come up with anything."
It sounds like they already know how rude this is, especially for a destination wedding. Good cow. Why don't they take their own hotel, airfare, and meal costs and do an inexpensive wedding in their home town instead? You can feed a lot of people cake and coffee, or pizza and beer, for a lot less than that would cost. Or else just go to Las Vegas alone or with only as many people as you can afford to feed.
If they don't register for gifts and indirectly let the word get out that they prefer cash, they can use their wedding gifts to pay for a simple meal for everyone. Most people who feel close enough to you to travel for your wedding and can afford to do so will probably give you a gift large enough to cover a restaurant meal.
This is not just a question of "being a stickler for Emily Post etiquette." That's just the kind of thing people say when they know they are being very rude, and want to recast it as "not stuffy." We aren't talking about which fork to use or how the processional should be arranged. We are talking about consideration and hospitality. To ask people to attend a destination wedding and not even feed them a simple meal or snack is just outrageously rude.
It's the same for everyone: have the kind of wedding you can afford to do, even if it's not the fantasy event you feel you deserve. That may mean you have to trim either your guest list or your plans or both -- in fact, that's the case for almost everyone.
But what there is no decent way to do is to plan any kind of reception you please and expect your guests to pay for it.