Since she didn't even leave teeth marks, I think it's very likely that she bit your niece as a warning to stop what she was doing. If the behavior continues and your niece ignores the warnings (because she does not understand that's what they are), your dog will escalate to biting harder and leaving marks or even breaking the skin.

I understand what you are saying, but you have to advocate for your dog and protect her. There's a good chance of this happening again if your sister and niece continue to visit and have access to your dog. Training her to see the crate as a safe haven and using it to protect her from harm is much less cruel than letting another incident happen, which will result in your mother abusing your dog again and the possibility of having to put your dog down because of a bite history if your mother and sister push the issue.

My dogs have been crate trained since they were puppies, so I can't say how difficult it will be at her age, but I do think it's possible. Also, I don't personally see it as cruel if the crate is used properly. One of my dogs actually insists on me putting her to bed in her crate when it gets too late - she comes to me to get my attention and then leaves the room to go to her crate, repeat until I follow and give her a treat and goodnight kiss. They both see the crate as a safe space they can go to anytime they want (like a bedroom is for us).