I see both sides. Good for the kids to see parents at get togethers, getting along, etc, all that fuzzy good stuff. If they can handle it and get along, fantastic! I do however see the "extended family" side of things. They may have worked out whatever caused their divorce, and found a new way of spending family time for the kids sakes. But maybe they've forgotten or don't care, about how extended family feel toward the person. Personal issues between others and former sister in law, or vice versa. And the reasons that the divorce happened could have caused family to have negative feelings for ex sister in law as well, protective feelings. Not to mention, if she was unpleasant before the divorce, the family was putting up with her as a part of the active family. Now though, she is not part of the family except to be the kids mom and your bro's ex (in my opinion). I know that sometimes the family is so close, that post divorce, the person is still like family. Great. Not so great for those that don't have gushy feelings for something or can't stand tolerating them.
My cousin, she is like my sister. We have such a pathetically small family and she and I should have been sisters. She has one child, he's awesome. My cousins ex, her childs father? A complete loser and obnoxious etc. They seperated a few times, each time I"d play nice and be family-like anyhow, of course knowing chances were there they would reconcile. Then the permenant break, and eventually they found their way to being in attendance at events etc and are good with it. I'm truly happy for them and for my cousins son. HOWEVER, once that split was final? I was NOT going to put up with myself and my kids being miserable at family events because he was there. Exceptions of course for their sons birthday or band performances, grad etc. Of course his father should be there, and I wouldn't miss out just because I loathe the man. But Christmas? Sunday dinners? Games days? Easter? etc??? No way, no how. I just finally privatly spoke with other family and got a reading on how they felt. None like him much, many felt like I do, keep him away. A few thought they'd be able to tolerate although admitted it did change the enjoyment of get togethers and they resented that. I ended up speaking to my cousin and hoped for the best while expecting and preparing for the worst. Thankfully, she understoood completely. We all do get togethers with class and respect when it involves milestones for their son. And I never feel a ounce disturbed by him at those times. He has a rightful place and if it was bad/awful, it should and would be ME exempted if I couldn't handle myself appropriatly. But now, our general family functions? He is not invited , period.
Any chance you could speak to bro and say something like " YOu know, I see how well you and ex sister in law have managed to remain coparents and be around each other and its really refreshing to see, that's fantastic! I'm truly hoping that since you two have managed to put the problems you had that led to divorce, behind you and forge a new dynamic that is healthy, perhaps we can ALL do that. You see, I can see how good it is for (insert childs name) to have you both there for things etc. And I of course also wants what is best for my nephew. There is a problem and it is on my mind, in that I often feel very (Insert description) at functions with her because of things such as (Insert a few examples). I'm hoping there's a chance that you can speak to ex sister in law about this, given your new obviously healthy ability to get along and work through things, and see if you can help her realize that we all respect her role in (childs) life, and she is welcome to attend our family functions of course when you invite her. However it is becoming hurtful and damaging to have her XYZ behaviours interfere with my and my childrens enjoyment of functions that include us all, even my own parents and my kids grandparents. If we can work this through, I won't have to make a decision to see (parents, siblings, whoever) seperately at holidays etc to ensure we can ALL enjoy those special times. I would hate to see that happen and I am certain there's a way that we can ensure we are ALL on a better communication path and have a healthy dynamic with ex sister in law. Unconventional can work, but it has to work for everyone and right now, XYZ are creating a atmosphere where it isn't working and that isn't fair to this entire family. We can make this better, what do you think you and ex sister in law can do to ensure that it happens?"
I'm all for respecting others, but I'm also all for being honest if things like holidays are being ruined, especially when this is a divorce situation etc. It's awkward. If she can knock of the realllly hurtful stuff, it will be easier to just go with the flow when she attends things and overlook the "not worth stressing" things that annoy. Its the biggies.