I had a disturbingly easy C-section, birth and recovery. Physically and emotionally I would have been fine to attend as maid of honour. Could have done it after a week with no issue. And with my first hours bottle feeding, so no issues technically with me not being there. And I was pretty chilled, in that my husband took baby out to see friends while I chilled at home within a few days, no anxiety about separation.
I say not not because I think you should go along with this plan. It's 🦇 💩. I say it because even in my situation hell would freeze over before I would agree to that. Being apart from baby for a few hours is different from a whole day, and baby being prohibited from being on the premises because of the jealousy of your sister is frankly disgusting of her.
Your mother-in-law being upstairs with baby was a perfectly good compromise, though your sister realising it's not all about her and maybe embracing the new life within the family would be even better.
With my second I breastfed, and although my husband had very extended paternity leave, I always had to be near my bottle refusing baby, because you can't predict when they'll get hungry in the early days. So I was the weirdo sat in a car working on my laptop, whilst my husband is doing baby massage class with my 6-week-old.
Your sister's actions are incredibly hurtful. Perhaps they come from a place of not understanding, but she could apply some thought. We had a brand new breastfeeding mum at our wedding (long before we had kids), baby was welcome throughout (as were about a zillion other kids), but mum also had access to the bridal suite for a quiet place to breastfeed and rest if she needed it.