Yes. I know similar story. Child would only eat cheese. Drove the parents absolutely nuts. Temper tantrums. Parents gave up trying to give him good food. Just gave him what he wanted. He's in high school now and has been arrested twice. Has constant problems with boundary issues. For instance, takes the parents credit cards, takes cash, does whatever he wants. Parents try to punish him, it doesn't work. It's a nightmare for the parents.

Tell your sister to absolutely let that child know who is the adult and who is the child. Talk to a child psychologist.They will tell her that the kids really want boundaries. Letting them have what they want is not loving them. No boundaries = wild kid turns into wild adult.

Nip it in the bud now.