Is OTHER wrong in the post ? POST : (repost because of prior word choice and request to change it.)

My wife's sister has a daughter who is 5 and developmently challenged. I'm not sure what it is that is holding her development back. She wears a diaper, she doesn't talk often and when she does she screams until she gets what she wants. 

The problem isn't so much that she is or isn't, the problem is that my daughter who is 3 is so much more advanced than her that people often think my daughter is older. She is potty trained, she gets her own food, brushes her teeth, takes her own baths, she is very self sufficient.

Every time she hangs out with her cousin, she regresses hard. She cries for her water bottle that is 5 feet away, she says she wants to be in diapers again, she won't feed herself.

I hate it. She loves her cousin but I'm sick of her holding my daughter back. It's not my fault sge can't figure out how to not shit herself when watching TV. Her parents refuse to do anything to better the situation or correct her. At this point I find it more detrimental to allow my daughter to continue being around her than benefit. 

My niece doesn't hurt anyone on purpose but she does have bouts of rage and if she does hurt someone she thinks it's funny. This has lead to my daughter hurting my youngest with excuse "I was just trying to be funny."

At this point I think it's more detrimental to my daughter to be around her cousin than a benefit.

So. Am I the asshole for not wanting my daughter to hang out with her cousin?