Oh, the free ranging kid woman....you posted about her before and I agreed that kids + pond = bad idea.
There are times when I call kids on their behavior. In my home? Certainly. "Jack, we don't jump on the couch in this house. Please sit on the furniture." If the whole family feels the same way, maybe you all look out for the kids at family events. "Oh, twins, let me carry your balloons for you. It's safer that way." Or "Kids, all of you, you cannot run through the kitchen. We are cooking here and you can get hurt."
You are right that one day their inattention is likely to have really awful consequences. :(
Edit to add that you can tell the 7 yr old that he can't cuss people out and it isn't funny. That's not acceptable in your home, period. Put HIM in time out. Years ago, we had a friend of SS's get upset when we would not let him play Grand Theft Auto at a party. The answer was no, because we didn't allow that game. If he did not put his game back in his bag, DH firmly but calmly said he would take it and the kid would get it back only when his father came to get him. Mr. Tough Guy backed down and had a fun time with other games. I think that your nephew can learn what isn't going to fly in your home, and he probably needs an adult to guide him. You also need to weigh your kids' needs with the fact that they are family. Not all relatives are good for the soul, you know? I have a cousin I can't stand and we had to play together as kids. I hated it. We just weren't similar people and she's still a liar and manipulator. There may come a time where your kids ask to stop hanging out with him, and you shouldn't push it.
That the older kids parent the younger ones is telling. Their parents have bailed emotionally. :(