In my opinion, you should not drop this. Your daughter should be, in my opinion, more important than your brother. She has to know, that you have her back, if someone is lying about doing something to her. She has to know, you believe her. If you drop this, she may believe you won't believe her if she tells you other important things that could have a detrimental effect on her.
I'd definitely talk to brother, in a public place, or even record the conversation, for your own well being. I'd ask him flat out, "if you know someone liked to tell lies on people, and told him one of his children kicked someone in the stomach, would you believe your child, or would you believe the lying adult. Do you know what kind of effect this could have on a child?"
Also, let him know, that there is no way, he is going to be seeing your children, especially when he believes that DD "violently attacked" a pregnant woman, and that if you had any say, he would not be attending the hockey game either.
You oldest is 18, so he can make his own choices, but you are not in the wrong, if you ask him to not see uncle, but that if he insists on doing so, to not do so behind your back, and to be very careful.