First, the issue of all Christians being priests. This is true. The Catechism teaches this, and the rite of Baptism does as well. What has to be understood is what is meant by this. A priest is not merely someone who stands at an altar and offers living sacrifices. A priest is someone who lives in a close relationship with God and offers service and sacrifice to Him and is set apart from the profane and worldy things. Thus, the Levitical priests of the Old Testament lived in a special relationship with God. In fact, they were the ones that were permitted to go into the Holy Place and be near or in His presence. They also trusted Him to provide for them. They offered sacrifices to Him, and they served Him. Their lives were dedicated to God totally. This is what a priest is.
As Christians, this is what we are. We live in a close relationship with God, and we offer our entire lives in His service. We make sacrifices when we give up sin for Him, or when we choose to be joyous when we are in a bad mood, or that sort of thing. Most importantly, we are set apart from the world. In this sense, we are all priests. The Catechism of the Catholic Church teaches this (see paragraphs 1141, 1143, 1268, 1273, and 1546-47), and the prayers said during a baptism in the Catholic Church say that we are being baptized into a royal priesthood. As Christians, we all share in the gifts of serving God in a deep relationship with Him; we are all priests.
However, we recognize a ministerial priesthood of men set aside in a more particular way to serve God. This is in no way contrary to 1 Peter 2:5 and 9. In fact, it contradicts Scripture to say that it is. When Peter teaches this, he is simply quoting Exodus 19:6 where it says that Israel will be a kingdom of priests. Israel was a kingdom of priests in the same way Christians are: in a world full of godlessness, Israel was and Christians are a kingdom of people set apart, who serve God in the midst of those who do not serve God. We are a people that offers all we have to God in a world where others do not. Yet Israel had men set aside to serve in a special ministry as priests. Even though they were a kingdom of priests, they still needed to have a ministerial priesthood that was unique from the priesthood of the faithful. The same is true today.
Regarding the idea that all Christians are saints, the Catholic Church teaches that as well. A saint is somebody who is sanctified - that’s what the word means. Now in Catholicism the word is used most frequently to denote Christians who have gone on to be with God, like St. Francis or St. Stephen, but the fact that all Christians are saints is not denied in any way. We simply most often use the word to refer to those saints in Heaven. Now there is nothing wrong with using a word like saint in different ways. For example, it is used in entirely different ways in Matthew 27:52, Daniel 4:13, John 6:69, and Psalm 71:22. If you’d like an explanation of these uses, some Catechism quotes, and a more in depth discussion of the Catholic use of this word, please go to jimmyakin.typepad.com/defensor_fidei/2004/06/check_your_fact.html.
The issue your uncle has with the vestments is really the same problem he has with music, which is that the New Testament doesn’t command us to use these things. The Church of Christ has a very, very restrictive way of looking at the Scripture, based on the ideas of Ulrich Zwingli, one of the reformers. Basically, if the Bible doesn’t expressly say something is permitted, then it’s not permitted.
The problem with this is that there are an infinite number of things the Bible doesn’t expressly permit, many of which the Church of Christ does. The Bible doesn’t say we ought to build particular buildings to worship in, yet the CoC does that. The Bible doesn’t say Church services ought to be offered on Wednesday - but they do that. It doesn’t say church should last an hour, or churches ought to have clocks in them, or people ought to dress in their Sunday best to go to church, or any number of things. If we are going to rule out things just because the New Testament doesn’t condone them, then we will have to rule everything out.
Now vestments and musical instruments have the additional merit of having been ordered in the Old Testament. They were a part of the worship of Israel. Therefore, we know that they are not evil in and of themselves. They were permitted and commanded for use by the Jews, so to most people it makes sense to use these things seeing as the New Testament in no place forbids or even mentions them.
Musical instruments also have the advantage that they are used by the angels in their worship of God in Revelation chapter 8. The heavenly worshippers are also shown wearing robes in Revelation chapter 7.
Regarding Hebrews and the Sacrifice, see jimmyakin.typepad.com/defensor_fidei/2004/06/check_your_fact.html, and www.soladeiverbum.com/massmain.shtml.
Peace and God bless