I didn't read all the responses but want to respond to the OP. I think it is 100% your right to keep your kids away from another child who is repeatedly physically hurting them- even if he is family. If I had a cousin beating up on my baby or kid of any age, I would not let my ds be in that situation if the other kids parents are not stepping in. I think you should have a talk with the mom of agressive kid when no kids are around- and say
"-listen, I really want us to be able to hang out, and some niceties-however- having my kids be hurt by your kid is unacceptable to me. I see that you are overwhelmed with him. If you would like some advice, since I have parented 4 of them, I would be happy to shre my ideas with you. IF you are not willing to do anything about the situation, then I would like to either have your permission to discipline your kid, or request that we not hang out while he is acting like this."
so in other words, try to broach the subject with the mom from the approachof- my kids are getting hurt and I need to figure out how to make that not happen. Ask her if she wants advice before giving it, and then maybe try to brainstorm together to find a workable situation. IF she is not wlling to do anything differently, then I think you should just stop hanging out with them. you can't just let another kid harm yours just because he is young and family! good luck