Wow, I totally understand how you feel! Even though my daughter is younger than yours, she seemed to be the only child in her playgroups that would not yank toys away from others...and she would cry when some child yanked a toy away from her. There is a HUGE difference between having a toy stolen out of your hands and sharing...and your daughter (and mine) is not doing anything wrong by becoming upset. I'd be pretty upset if someone walked up to me and yanked my cell phone out of my hands without asking!!
On one hand, we are SO lucky to have daughters that do not have the propensity to be bullies! On the other hand, I know there were many times I wanted to teach her to yank the toy back! (Even though I knew that wasn't the right answer.) Shame on your relative for not even attempting to intervene and teach her son that yanking the toy away was not appropriate behavior. But...you are 100% correct: the Mom on the other side will not appreciate you attempting to correct her child. Unfortunately, bullies are a part of life from childhood to adulthood.
What really changed things for my daughter was when her younger brother came of the age to want the same toys. You've got quite a bit of time before this happens, so the one of the other strategies I've used is to instruct her to come to me if she needs help in this situation. That way, I can soothe her before a meltdown. I don't get the toy back for her, but I can quietly talk her through the moment (explain that not all children share as well as she does, etc.) and avoid the public meltdown. I would avoid berating her for "not sharing," since she was not asked to share. It's not her fault. And, of course, continue to teach her the correct way to share and ask others to share.
If these things happen at your home (your daughter's safest haven!) you can be much more verbal or assertive with the bully about the "house rules." I believe it is very important for your daughter to see her role model (you!) handle the situation in a calm and kind manner -- so she can learn from it. Plus, standing-up for your daughter on her "turf" will help her understand that she is not a victim and is not at fault. All it takes is to inform the bully that "we never take toys away from each other at this house" and ask the bully to return the toy.
Sorry this is so long. I really feel for you and your daughter. I'm looking forward to seeing responses from other Mom's whose kids have been through this and are older! Good luck to you and your daughter.