That is really good advice, thank you for that. I have kept all communications from SIS including email and voicemail. (Mostly, that's because that's what we do when it rankles - keep it, so you can obsess over how offended you are for decades to come. Oh, we might forgive, but never forget in our family.....

) but actually, in this case, it isn't rankling so much as it is concerning. And keeping the communications for the sake of practical considerations is very good advice that I intend to keep.
As for calling the authorities, I am now on the fence. On the one hand, I don't KNOW with any certainty that what she's said is remotely true. And my concern is that I would simply be calling the authorities to "punish" her or for retaliation in some way....so I need to be real careful and check myself to insure I'm doing the right thing for the right reasons before I proceed. And not take too much time about it, because if the kids ARE being harmed in any way, they need help NOW, not later.
On the other hand, it could be that she is indeed just trying to manipulate me by pulling my guilt strings. Or, that she is overwrought and stressed out from the responsibility. And it could be true that BIL lost his job, though I can't confirm that either way. If they ARE having financial hardships that could affect the children, I don't have the means, currently, to help out; but perhaps the state can help them locate financial assistance or affordable housing solutions, if needed. I would imagine that the system would prefer to keep the kids in the same home they've come to know if it is possible - and through that process, ensure that SIS and her husband have access to the proper resources for their care.
Plus, I imagine that since the children are attending school, that the teachers (particularly of the special needs child) would be highly trained and able to tell if nutritional needs are being met or if they are being neglected in some way. I hope.
At the end of the day, though, BIL's employment status being a mystery to me, I know one thing: nobody in my family has great coping skills. We do tend to panic and freak out, and go on the emotional attack. Based on my knowledge of my sister, I am reasonably sure that is what her behavior is about. She's stressed out and overwhelmed. And if that's true, then maybe some additional resources need to be made available to her to help manage the care of two children, one of whom has some pretty intense care needs - which could be difficult for a regular person to handle, much less someone with our family's notoriously poor coping skills.
So maybe a call would help, then. Maybe the kids won't get removed or SIS in trouble....maybe they can make sure they are getting the resources they need.
Or, maybe I'm just rationalizing and need to leave the whole thing alone and trust the professionals who work with them to get involved if there really is a problem. I have never met the children and have no biological or familial ties to them; however, I DO have a generic concern for their well-being as I would for any members of society. Really, I just want to walk away and forget about the whole thing and just get my own life figured out. But then, I feel if I do that, maybe I'm shirking my duty as a citizen to two other very vulnerable members of society??? Or am I sticking my nose where it doesn't belong and making trouble?
I just don't know. Just don't know.