Thank you to everyone who offered their advice. After talking to my better half and his unit that he deploys with it was decided that my brother in law should know. I talked to him last night and told him what I knew and what I suspected. He told me that he's not mad, but wishes I'd have told him as soon as I found out. He also said that he had the suspicion that my niece wasn't his daughter, but didn't think my sister was still messing around on him. So he's going to file for divorce when he's back. While he's gone we'll find out for sure if my niece is his. My sister doesn't yet know that I'm the one that told my brother in law the truth, but I'm sure when she finds out there will be some nasty words said. I'm alright with that though. I love my brother in law like a brother and he deserves to know the truth. He and I were raised on the same beliefs so I know that no matter how much he loves her... he can't forgive her again. I don't think I could either.
However thanks to all who took the time to give me advice.