I can understand why you would feel upset and betrayed, the thought of a man I had been in a serious relationship with, who I had been intimate with in body and mind, and then over the years developed a deep friendship with, to whom I had probably confided in and who knew the dynamics of my family and relationships, suddenly taking up with teenage baby sister! I wouldn't be upset, I'd be fucking furious.
From the sounds of if OP, your sister probably feels exactly the same way you did when you fell in love with him as a teen, you know how intense and blinded you can be at that age, there may be an element of jealousy and competition between you and your sister, but do you think that this is something calculated? Chances are probably not, chances are your sister is over the moon because her childhood crush is interested in her.
I would focus my anger on someone who had assumed the role of best friend who deceived and betrayed our friendship, not a little girl who is in love for the first time, just be there to support her, try not to be bitter or angry, let her know you were really disappointed that they didn't let you know, that you feel uncomfortable, but if they are happy then you are happy, and then keep your distance and wait it out.
What you do now is going to determine how they proceed in this relationship for the immediate future, reacting badly will push them closer together, who knows, this could be it for them, and would you really want to deny either of them that?
You sound like a caring person who has been hurt, that is fine, you are entitled to feel that way, just don't show them that.