My condolences for your loss of your father in law. I wish you and your family well...
Well, I would agree that the author of Genesis did accept the existence of other gods, but I would disagree that he accepted only worshipping one at a time. Do you have examples in Genesis, or anywhere in Scriptures, where the author accepted worship of anyone outside the one God, creator of all?
I don't think there's a progression from polytheism to monotheism as far as the Biblical authorship is concerned. I see it as uniformly monotheistic from start to finish. For example, even in Genesis 1, many scholars see veiled references to the Canaanite gods Tiamat and Yam in Genesis 1:2 (Tehom "deep" and Yam "sea") and the author clearly communicates that God has all these other gods in his control, making him alone God.This is in direct contrast with many of the other ANE creation accounts where multiple deities are named and partake in the creation account.
Finally, regarding your verse, Gen 3:5, yes Elohim is in the plural, and can sometimes be translated as gods, or even mighty men, but in this context it can only be translated "God". The surrounding context helps decide this. For example if the noun Elohim is preceded by singular verbs or adjectives, then that dictates the translation must be God. In Genesis 3:5, Elohim is followed by the word "yada" which is a participle construct in the Qal tense which is masculine, singular. Thus only "God" is a grammatically correct translation.
Elohim appears 35 times in Genesis 1, and the vast majority of the time only "God" in the singular is possible translation because of the singularity of the verb associated with it. Even within Genesis 3:5 itself, the first Elohim can only be singlular " For God knows that in the day you eat...." Besides the grammar of the participle, it is unlikely the author meant to switch the subject from "God" to "gods" in the same sentence. More likely its singular throughout.
Now there are several interesting passages like Gen 1:26 "God said, Let us make man" where the "us" leaves no doubt a plurality is intended as the subject. Yet in the immediately following verse, Gen 1:27, it proceeds to say "So God created man in his own image" which can only be translated in the singular. What we have here is a grammatical construct that equates unity with plurality. I say the best explanation is that the human author intended to convey a plurality or majesty of the subject, while the Divine Author (if we accept Christian Theology) was indeed giving a foreshaddowing of the latter concept of the Trinity, in line with the progressive revelation of God in the bible.
Now, I'm aware that every generation from Abraham to Malachi had Israelites worshipping other deities - but maybe you can help me out by pointing me examples where the author condoned such behavior. That would help me move closer to your ideas and the progression from polytheism to monotheism that you see happening.