Wow, I can't believe the balls on your BIL! Did he at least apologize? Did he offer to give back the gift or get a replacement gift for your daughter? I can't imagine taking a gift intended for another child and giving it to my child. That's stealing. Oh geesh, at least tell us that he was embarrassed or showed some kind of remorse. That just sucks.
ADDED: I didn't see your 2nd paragraph before typing my response above. If I had thought of it at the time, I would have given him the box back and told him that we would wait to get the gift back when all of the parts are in the back in the box. Now that it is over, hopefully your sister will step up and do the right thing on behalf of her husband (I would be so mad at him if I were her).
Otherwise, now that it is all said and done, I would just let it go but know that, in the future, if someone gives your children a gift and BIL happens to be around, make sure you immediately trunk it so that BIL can't get his hands on it and re-gift it without your permission.