Hiya, I don't think you're jelous, it sounds like you're genuinely concerned for your friend. I think it does sound quite obsessive, there is a difference between 1)having alot of time for your nephew/nieces, loving them with all your heart, and 2)living your whole life for them. It's not healthy to live your whole life for any children, your own or anyone elses. I mean, obviously you do to some extent, you would give your life for them, but people should also have/keep their own interests.
It sounds like you have tried so there's not much more you can do. I agree it might be a good idea to spend a day with her and her nephew, it might give you a better idea of whether she is genuinely happy doing it or whether she's being used by her sister. It might put your own mind at rest too if you find it is just genuinely what she enjoys doing.