I agree that skipping it is the best way to go. If the parents say anything about other one year olds getting a party then just tell them it is the food issue and maybe that will encourage them to bring their child up to par with the other kids - teeth come in because kids chew on foods and exercise the gums. Then tell them you will go out of your way to make his second birthday special.

If you give gifts to the children you could still do this part just not the party part. Suit yourself if you do cupcakes for the rest of the kids or make it really fun and give them each a candle to blow out since the baby is too little to do it without help. He will still enjoy the candles from his high chair whether he gets to eat them or not and he is used to watching the others eat different than him so no change from the routine.