All I can give you is what I would do myself in this situation.

I don't listen to bollocks from kids that hurt others and pretend they are sorry. I don't argue with them but I will tell them that they won't be coming to play/on another picnic etc if they continue the behaviour.

If they kept it up I would tell them they aren't to play with niece anymore and send them off elsewhere until they can learn to play nicely.

And I do this with other peoples children, and I do it with my own...

hth