I've read through your post a couple of times and it got me thinking.
On one side, I think the mentality that seems to exist nowadays of "not my problem" has contributed to a significant drop in my faith in humanity over the course of my twenties and into my thirties. The "walk past people who are clearly in need" mentality.
The question that the OP is asking here is not "Do I have to adopt my husbands sisters children" but "Please tell me it's OK to not adopt my husbands sisters children". She's looking for affirmation that this is an acceptable behaviour as to alleviate the guilt they are feeling.
I'd be interested to see the split in advice between people who children and those who don't. I'd hazard a guess that those who do (like me) identify with the needs of children over needs of themselves. There is definitely an element of selfishness.
If this was me, it's clear those kids have suffered enough. I'd be the change I'd like to see in the world. Just because I don't "have" to, doesn't mean that I "shouldn't". Everything else is material.
If you would have asked me the same question 3 years ago, and 8 years ago I would have given a completely different answer. My daughter (second child) was born with cerebral palsy and it has completely changed how I look at the world. She is nearly 3, can't walk, is essentially paralysed down one side of her body and I couldn't possibly love her any more than I do. When she was born, my immediate mentality was "why me", it quickly changed to "why her". I knew at that point that my life goal was to make my little girl's childhood and adulthood as easy as it could possibly be for her. The stigma for people with special needs is terrible. Just because someone is going to require to make more effort, does that mean we abandon them? Our core values as human beings should not involve casting people aside just because they may be harder work, especially disabled children. They are people to.
Thankfully, my parents aren't dead. But I know that if they were, and I put myself above my own sisters children in their time of need my mum and dad would never have been so disappointed in the person that they raised.
Do you have to take on your husbands sisters children? No.
Should you try to do your best for those children and give them the best possible chance you can in the world? Absolutely.
I suspect we're probably relatively alone in our views here. I leave other people who read this with a quote I read somewhere once.
"I've never been especially impressed by the heroics of people convinced they are about to change the world. I am more awed by those who make hard decisions and sacrifices to make one small difference".