When I have a Sensitive subject with a friend that I feel needs brought up, I do it in a sense I put the story back on me, like saying "you know I was going to get mad today as So and so got upset when I put her in time out, however you know I thought and realized I have to let her have feelings, it is so important for kids to express their emotions"...blah blah...if you flip it around, putting it as you are talking about yourself but getting a point across for them, sometimes that helps.???? Sometimes that can help your sister initiate her thoughts and will open up a discussion on the subject without it being personal against her...??? I actually did this as my friends little girl is soooooooo manipulative. I see it and she acts like she needs to talk about it and instead of being direct I used past experiences with my daugther to start the conversation on what to do with a head strong little girl, hee hee.
You know having them supress emotions will lead to a lot of undo and bad behavior down the road. I tell my kids DAILY, you can get mad it is how you act or what you do when you are mad that will make or break my mood, hee hee.
I tell my kids daily, you don't have to like the rules,don't have to like what I am telling you to do, HOWEVER you do need to do it and listen to me. Giving a child permission to be upset is the best gift. It is then about teaching them what to do with those feelings, they aren't to hit, throw a toy, back talk or anything because they are upset though.
I do tell my kids if they are going to pitch a fit to go into their rooms until they calm down as they are hurting my ears and upsetting the house with their fit.
If you are close enough with your sister I would talk to her. Don't be critical however just tell her that if she punishes a child for having feelings, then later on it could backfire on her. Kids are going to have feelings, a lot of them in the course of the day and no it isn't okay to have a tantrum or be disrespectful, but it has to be okay that they are upset and if she was more sympathetic to their feelings they will be more prone to open up to her when they are teens.
Even finding a book on the subject and giving it to her so she doesn't take it as a personal attack. It is a tender issue as you don't want to tick her off, but there is no reason you cannot tactfully deliver your opinion, just keep stating, this is my opinion....
My brother who is 48, single, no kids even pipes up sometimes after he has visited as to "helpful advice" on something he sees me doing that maybe I could do better. While before it was how he said it that made the difference if I got defensive I have learned sometimes it is good to see things from another prospective! Good for you looking out for your nieces.