I don't think it's a problem for your son to have the same middle name, or even first name, as your nephew. But then I'm Greek, and it's Greek tradition to name the children after their grandparents, so I have a lot of cousins with the same/similar name - Alexander/Alexandra (Lexie), Evelyn/Evgenia, Christopher/Christopher... my dad even has the exact same name as his cousin as they were both named after the same paternal grandfather and unfortunately descended through his male children
Overall I think it's a mark of respect for your mother that both you and your sister are heeding. It could be worse; she could've loved a name you really disliked, and then you'd really be in trouble!
Have you thought about using it as a middle name as well? My DS and my nephew are only 2 weeks apart in age and they both have James as a middle name as it is my Dad's middle name and it my brothers middle name and it was my Grandad's middle name also.
Also DD and DH's cousin are about 4 months in age and both have Rose as a middle name as it was DH's Grannys name so had real significant meaning for both him and his uncle. I really dont mind, I think there are going to be many thousands of people out there with the same names, but if you love it then go with it.
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