Op can you take a step back and try to think it through logically,
whether you felt the comment was irrelevant or not, it upset your niece and her mother, your own mother also felt it was unacceptable and he should apologise.
this is what most people would have done. I’m sorry, I didn’t mean any offence, move on.
but you and your husband went full on scorched earth and attacked. You left the house raging, in your own words, then cancelled a normal Easter and informed your brother you were going no contact with his wife, calling her a toddler. You thought you had the upper hand, you did not. You never did. The moment he failed to apologise you both lost any claim to the upper hand,
your lengthy diatribe over your sister in law, her career, her fitness, her lifestyle, her charity work, her education, and your clear fury your family love her, displays your envy fully, which I suspect is at the root of all this. Envy can make us behave unreasonably, so take a step back.
this is your brothers wife, your nieces mother. You and your husband put a division in the family and for no reason at all.
now whether she told or what happened we don’t know, and I suspect neither do you for sure, but the way you’ve treated her, why should she keep you and your husbands secret when you both treat her so terribly? I am absolutely certain if the shoe had been on the other foot you’d have been telling everyone who would listen. Not just one person. You’d have used it to attack her, bully her and humiliate her,
every one of your actions have been questionable at best, and you downplay it all, even claiming she made it personal, you were not making a big deal of it, having just told us you’d cancelled Easter and told your brother neither of you wish to see her again, as your husband caused offence. If that’s not personal and making a big deal of it I don’t know what is.
I think the onky option now is complete no contact with your brother and his family, You won’t apologise and now too much damage has been done. The families have to stay apart.