I don't feel the need to have any interaction with OM2's sister or OM2's niece simply because they didn't directly wrong me
It does seem like you're projecting some of your anger towards your XW for betraying you upon her. I suspect if any other parent whose kids played with yours invited your kids, you'd politely accept or decline (e.g., option #4), right? I agree she doesn't deserve preferential (family-like) treatment, but I wonder if she deserves sub-par (betrayer-like) treatment. It's not her fault you're triggered? You do you. Where you can extend kindness, I think it can help to reduce drama. I'm blessed to get along with my ex.