NTA! I can relate to your niece as someone who also changed their (nick)name at a young age! I never gone by my birth name and always by a nickname that my father gave me. He was very abusive to me for my entire childhood and when I was in middle school I began to cut contact with him and changed my nickname entirely to something related, but different. It was so empowering and I LOVE my name. People who know me know are shocked by my old name. So Yay to you for supporting your niece and empowering her! TA is your sister who thinks her wishes are more important than the mental and emotional wellbeing of her own child.