You know once you do/say something then there is no turning back. You will do that when ready or you won't if that suits the situation better. Either way, it's your call. I would choose the easiest path. That varies from person to person

Do a face-plant into a large hunk of birthday cake and hope for a diabetic coma. You can't teach them anything and it doesn't help to make them mad.

Damn, I can envision it.. When surrounded, I secretly plan my escape. In your case, it would be what advice to give to whom and when … including your niece. Remain an example of someone above, then, few words count, cuz everyone’s listening. Though surrounded, you’re ahead, so stay there.

Nothing you can say will work, because they are delusional. Just secretly laugh inside and walk away.

Say nothing. It changes no one's mind, and ruins your niece party, at least for your brother. Just shake your head and walk away.