HelloNewman -
They are a pair of self-centered jerks.
You will never change that. Forget the psychobabble previously posted. Your sister and BIL violated any and all gracious actions that one affords to a guest - the general idea being that one invites company into one's house because you like them and like to hear what's new, what their thoughts are about friends and family are these days, and to show some amity and generosity of spirit.
You tried to be accommodating, but it's proven to be a lost cause. Sorry that that has happened... but you and your wife don't deserve to be stuffing yourselves with antacids over their actions.
Perhaps some day they will come around. It's not your job to wait for that. Yes - all have different personalities. Yes - we all shoulder certain things from our family that we would not support for others, because we care and have a history together. So understanding and tolerance is the rule. But rudeness, imperiousness cuts cruel and hard when a special relationship is exploited.
By all means, keep up caring about the little niece, in the small ways you can. Sadly, your tale seems to say she will need it - these two seem to be far more in love with themselves than with their little one.
Move on - hug your dear wife and child...that's your miracle worked. You can't work one for your sister.