Am I permitted to decline a dinner invitation from Muslims because the host's wife is not veiled and her husband allows it? And is the wife's lack of piety in her dress considered evidence of a lack of piety in her food?

If you can advise the homeowner and prohibit him from being lenient with his wife, then it is better to go and invite them [to righteousness], for perhaps Allah will guide them through you. As for the statement that a woman who displays her adornments (mutabarrijah) does not fear Allah in her food, this is incorrect; for her displaying her adornments does not necessitate a lack of piety in preparing food. The obligation is to have a good opinion of her, unless there is evidence that permits having a bad opinion.