and the update:

Posting the update here in the comment to try and give some semblance of organization to the comment thread. Hope this is ok, I would prefer a posted update since it's just cleaner and I'll get less crap for "trying to get comment karma or whatever that is". I'm using a throwaway guys, please :'( My niece came by at around 1pm today, and had a friend drop her off. When I answered the door, she looked terrible--it was obvious that she had been crying for some time, and I was wary of her and was worried she would throw another tantrum or simply cry and not hold conversation with me. I had already taken precautions with my wedding dress as people had warned, and locked the door to my bedroom and subsequently my closet. She started apologizing before we even got to the dining table, and told me that she realized that she was wrong and that she shouldn't have thrown the tantrum. At this point, my mind was at where many of the commentators last night were at---she was back to cry crocodile tears in hope of borrowing one of my other gowns. We sat down at the table, and she told me the whole story. Her mother had been "postponing" prom dress shopping because she said that there was no point to get a dress if my niece didn't have a date (her date waited until very late last week to ask, but it was mutually agreed that they were going together, he just didn't "officially" ask). My sister had told her "no date, no dress" because there was no point in going to prom single. So after my niece finally got officially asked, my sister then told her that she was too "busy" to take her dress shopping and that she would call me and they would just borrow one of my gowns. My niece was understandably upset that she wasn't allowed to go dress shopping (even with her friends), but agreed to just take one of my dresses since she didn't want to fight with her mom. They came over to my house and went upstairs while I was caught up with a client. My niece said that she was trying on dresses while her mother was pulling gowns out of my closet (for reference, my gowns are stored in my closet but my full length mirror is in the bedroom next to the window). My niece was busy trying on dresses and zipping herself up (since her mother was digging through my things) and when her mother came out with my gown, my niece said she didn't put initially put two and two together. For reference, my dress is an altered of the BLDN Penelope (was informed I am not alllowed to post links) , where I had layers of champagne and bronze tulle added in. The dress is not fully white, and even though the top is lace and "bridal", the coloring of the tulle skirt makes it look less "wedding". My niece initially thought it was just a "pretty champagne dress" and tried it on and understandably fell in love. She said she had a small doubt in her mind that it might have been a wedding gown, but she had never seen my gown and didn't think her mother would pull my wedding gown for me to try on. They packed the dress in one of the discarded black bags in my closet and packed the rest of the dresses away, and my niece said she had already seen the white bridal bag tucked away and thus thought that there was no way she had my bridal gown. Her mother had her call the florist on the way back to their house under the explanation that florists were understandably busy at this time of year and she needed to get her ribbon and flower preferences in ASAP. This solidified the theory that my sister had planned all of this, and used her daughter to further whatever twisted plot she had in her head. It wasn't until I went knocking that my niece realized that her mother had indeed given her my wedding dress to try on, and she was so upset and confused that she lashed out at me. She wasn't completely understanding of the situation, and thought that I had argued with her mother about taking a "bridal looking" gown since she thought my actual bridal gown was in the white bag. It wasn't until I left that she realized that regardless of what she thought, she shouldn't have treated me that way or screamed at me for ruining her prom. She said her and my sister argued for a long time (my sister called her dramatic for yelling at me and that her prom was "ruined" because she wasn't going to take her to get a dress) and she ended up going to her room and crying for the better part of the evening. I could tell at this point that she was genuinely remorseful for how she talked to me, and felt bad since she was genuinely kept in the dark for a better part of the exchange and used as a pawn in her mother's manipulation against me. However, I talked to her and told her that regardless of what happened, she was still in the wrong for blaming me for ruining her experience, and that she should have thought to ask or check if the dress she had was a special gown. I told her that I was disappointed in her outburst, but I still loved her and didn't blame her for the dress fiasco, but rather was disappointed that she thought it was acceptable to solve her problems by yelling at her aunt instead of holding rational conversation. I told her that even though it was obvious the main reason behind this entire problem was her mother, I still felt she needed to learn from this ordeal and that I would not be lending any of my things to her for a while, and that she would not be allowed near my closet for a few months at least. She completely understood, and even told me that if any of her friends pulled this with her, she wouldn't have even accepted to talk to them like I did with her. At this point, she was crying from frustration and I felt terrible for her. There was no way her mother would take her to find a dress, and I decided to take her dress shopping instead. We went to the department store and she found a beautiful, appropriate prom dress that matched her flower preferences. I told her that I would not be paying for her dress as a gift, and instead offered the payment as a loan that she would have to pay back before my wedding. Thus, she would have to pay me back for the dress with 1/4 of her monthly paycheck until 75% of the dress was paid back, and she would have to help me with some wedding tasks. She happily agreed, and we had a good afternoon shopping and talking afterwards. I also told my niece that her mother would not be invited to my wedding, but she was welcome to come. A part of her "labor" in exchange for me purchasing her prom dress would be the fact that she would have to help me with all the flower arrangements for my wedding. I am doing all the bouquets, corsages, and centerpieces for my wedding and would love extra hands, so she would be perfect for that task. I felt that this also would allow her time away from her mother, since she would have to spend more time practicing arrangements with me and my bridesmaids. The bright side is that my niece is going to college starting this summer in the city, so she will be relatively farther away from her mother and can start exercising her own freedom more. Thus, even if her mother restricts my niece's contact with me, she will be able to do as she pleases once she moves out from under her roof. I hope that allowing her to spend more time out of the house away from her mother gives her the room she needs to grow into a lovely young woman, and realize that many of the behaviors she thought were acceptable are actually bratty and unadjusted behavior as well as a result of her mother's narcissism. At the end of the day, I will be phasing out my sister from my life, but I will keep strong contact and support with my niece. I feel that she has a good head on her shoulders, and although it wavers at times with her teenage hormones and temper, she will turn out alright. I wanted to thank everyone for their advice, I honestly didn't think that my original posting would generate hundreds upon hundreds of replies and beautiful messages of support and advice. Also, all the comments that said my sister dumped the flour to distract me made me laugh. I can guarantee that although my sister is a lot of things, she is not a dirty flour pour-er. That title is reserved for my cat. TL;DR: Sister "masterminded" the entire thing, niece was kept in the dark until the very end and lashed out because she was confused and angry. She is not allowed near my personal things for a while, but I took her dress shopping and had her set up a payment plan of sorts to teach her responsibility. Sister is still not invited to wedding, niece is and will be helping me over the next year with decorations and flowers.