Of course you are not over-reacting. Your DBF seems to feel that his sister is such a snowflake that the correct response should have been "Oh, I'm so sorry, let me go and buy you exactly the ones you want!"
Next time he gives you something, perhaps you could immediately give them to someone (or throw them in the garbage, whatever) with a shrug that "it's not exactly what I asked for". Perhaps that would get through to him why you don't disrespect givers like this. Otherwise, I might consider turning the D to an X, if he really doesn't get why such behaviour is unacceptable.
In any event, I would never get this child another present until she apologizes. Which, from the attitude of her family, will probably be never, so consider it money well saved.