'I'm not going to make any demands of my mother not to see my sister with DS. I know that it's not fair for DS to be kept away from his auntie.'
Good aunties don't scream at their nephew's mummy in the street.
If you wish to mend your rift like an adult and your sister doesn't, and is being aggressive and hostile, then it genuinely is best that your son is kept away from that until it is resolved. Nothing to do with the guilt-trippy 'You're keeping my nephew away from me!'
She has no 'right' to your son, certainly if she is vocal in thinking that you are such a bad person, she should put her money where her mouth is and stay away from your family, right? No - she seems to want her cake and eat it! As you say, she wants to be able to treat you very badly, but to have good times with your son. Time she realised it doesn't work like that!
It's hard to say without really knowing the personalities involved, but I have a sneaky feeling that if you did put your foot down, then you might find your sister would be quicker to come round and realise that if she isn't prepared to build bridges too, then she loses more than she gains. Your mum isn't helping here - explain to her, she is actually ENABLING the rift to continue. If she were to say to your sister, 'It's rather ridiculous for you to want to play with DN but seem to want to carry on hating his family, isn't it? Bit of a mixed message, eh?' then she would go far further towards helping this situation to be resolved. As it is, sis is getting to stay in a huff but still play with the toys. Is this the way your mum generally relates to your sis? Do you think that's part of the reason why she's refused to make up?
I'd tell your mum this, and gently explain that if she wants to visit your sis, it's best she doesn't babysit. And explain WHY - that until this is resolved, which you want it to be, you don't want bad behaviour (screaming, insulting, refusing to be conciliatory) rewarded. That she's helping the rift continue by pandering to your sister.