It sounds like your father-in-law "reasoned things out" and "used his own judgement" rather than "blindly following" the "common practice" (in this case the electrical code). He was possibly thinking about the way water pipes (supply and drain) are sized. Unfortunately this does not work for home electrical systems. It actually works well under most normal operation, but fails if there is a combination of loads which allows close to 20 A to flow through the #14 conductors. A #14 copper conductor carrying 20 A would get very hot.
The immediate thing to do is to replace all the 20-A breakers with 15-A breakers on allany circuits which have any sections of 14 AWG copper wires. PossiblyThen analyze the wiring and you would see that some circuits could be rewired to disconnect the 14 AWG part from the #12 and these all #12 sections could be upgraded to 20-A breakers. New #14 cables from 15-A breakers could then be installed to power the lights which are on #14.