I hear where you are coming from Baren... went through it with my oldest son, first car lead to first girlfriend who introduced him to his anatomy and along came baby. Was I angry? I was LIVID, I made it very clear that I would not be raising any extensions to my kids relationships.
Babies don't ask to be born, and they don't ask to be born to stupid parents. Maybe this is a wake up call for your brother and he will step up to the plate, grow up and provide a loving home for his son.
You will be a wonderful Auntie, enjoy your nephew. :)