I know it's going to be expensive for you to pay your share for an 'unbiased' supervisor for visitation, but please look on the 'UP' side.
This person will be able to testify to the 'deteriorating mental state' of your sister when you go back to court.
Gwen is also correct, some of this is typical 'manipulative addict behavior'. I also have to say that to find the right medication or combination of medications for a particular mental disease can take time, lots of time. For me it was over 5 years until we found a combination of meds that helps my bi-polar, along with lots and lots of counseling in learning how to handle the fact that bi-polars have a different 'thinking process' lol.
You are dealing with a dual problem here, and I have to commend you for how well your own program has 'kicked in' to help you help your niece.
Please just remember that an unbiased third party is very important right now.
J M H O
Love and hugs,