Absolutely! If your baby is thriving off of your milk, her baby should also thrive. I give milk to my sister, and a friend and I nurse each other's babies, and we're not even family! We made sure we knew each other and were comfortable with each other's health status, and the decision was an easy one.
BUT, make sure your sister still tries to pump so her supply doesn't diminish. And she needs to co-sleep, sling-wear (skin to skin contact), nurse on demand, etc on the days that she has the baby with her.
Good luck! YOu're a great mom and a great sister!