To recap - your niece responded normally to a strange man being forced into her life when she was a young teenager. As I said earlier, a chimpanzee could have predicted her response. It's standard, normal and could have absolutely been lessened or avoided if her mother had just waited. Leaving it until she went to uni would have made everyone far happier.
But mother wanted it so mother did it.
She doesn't seem to even question why her daughter loathes this man. There could be very, very good reasons. He might be an absolute shit to her when OP is not around, he might have tried sexual advances, or it could just be that her mother ditched her daughter in his favour and she reacted in a predictable way to feeling unloved and displaced in her own home by her own mother.
The daughter would have come round eventually if her mother wasn't trying to vindictively punish her into compliance, strip her daughter of a safe, reliable relative's care, and ram a baby she's not interested in down her gullet.
OPs sister's attempt to coerce and abuse her daughter into compliance, the fact that she'd be happy if she had nowhere else to go, instead of being grateful her sister is a safe haven and a point of contact tells us all we need to know.
The fixation on forcing a teenager to spend time with a baby draws a natural conclusion - mother was planning on free babysitting and is angry that this will not be happening.
Basically, the mother is a selfish fool who wants compliance, regardless of her daughter's feelings.
She cannot win a battle of power - because she's lost her power over her daughter now and she's headed the right way to lose her daughter forever.
Moving forward, her only hope is to shut her trap and ask politely for updates from her sister. She can try dropping by to see her daughter alone with no baby or man in tow from time to time and keeping the lines of communication open. She must not, of course, issue any further commands or attempt to shackle the niece to the baby or the partner.
OPs sister will just have to accept that there will be no relationship between her daughter and these other people for a while, until OPs sister can repair some of the damage she has caused by forcing a strange man into her daughter's life and making her feel unloved, unwanted and displaced. She can do this by giving her daughter love, care and consideration with no strings attached. It will take time.
However, the reality is that the OPs sister will almost certainly keep issuing commands, trying to throw her weight around, demanding compliance - and lose her daughter altogether.
At least the niece has a safe haven with her aunt, it's vital she has somewhere safe to stay and go, she is still young and needs to know someone has got her back - even though her mother does not.