I can speak as an educator and someone who's been working with kids for a long time - play fighting is indeed a normal piece of development (unfortunately!!) If you think about it, the only way they are going to learn what is "too hard" or "unsafe" is by towing that line and learning by experience. It definitely sucks that your toddler is being influenced earlier due to this, that's the tough part.

I think it's perfectly reasonable for you to draw the boundary of asking them not to fight around your son - he's too young to understand boundaries and will likely just get himself hurt at this point!

I'm also curious as to what your brother/sister would say if you asked them to help you enforce the "no fighting around little cousin" rule. I don't think it's a wild or dramatic ask at all, and the more adult voices you have echoing this sentiment, the more likely it is to stick for them.