I keep hoping that as my nephew grows, he will become less of an accessory and that my sister and her husband will truly bond with him. My sister is my best friend and we always looked forward to raising our children together. I never guessed we would have such fundamental philosophical differences. I worry that I am losing respect for her and in the process damaging our relationship. Your sister may or may not end up being a different kind of parent than you, but the proof is in the pudding, as they say, and your puddings won't be ready for many years to come.
Parenting styles differ widely.
But the same woman may be a very different mother when her infant becomes a toddler. Until then, you have no idea what your sister is like as a parent or what that parenting may yield. Finally, don't forget that that child your sister has in tow is your nephew. If she does turn out to be inept as a mother, he will need you even more.