It sounds rude- I have a younger (tween) with ADHD who is challenging to say the least. It's really important to set boundaries in advance when kids are prone to acting up. My son knows (we even joke about it) that if his school ever calls me about his behavior, it better be to tell me he's won a trophy.

Expectations are really a parent's job- but it sounds like your sister doesn't set advance expectations then becomes defensive over her DD's rudeness.

Laughing hysterically at someone who is missing something sentimental and who has poor vision would resulted in an apology from my son and a loss of a valuable privilege. It's a lack of empathy and courtesy- which is normal, but never acceptable, in children and teens.

I put up with a lot things at home, because there are a lot of things that are more difficult for my DS to control with his ADHD, but being a bully and being rude to adults outside of our home- nope.

(1. Niece was rude, avoid her in the future.)

OK, now on to the critical part -

2. Nobody is on your side. Pay attention to this! It means you are behaving in away that does not garner respect. You MUST correct this, otherwise you will continue to live a miserable life. Borrow self-help books at the library, consult a psychologist, seek the help of a therapist. Analyze your interactions with people, and notice how you behave versus how other people behave in the same situation: what you say, and HOW you say it, your gestures, your tone, everything.

OP, I do NOT think you over reacted. She owes you an apology.