I know this is late compared to the queastion, but for others newly looking for this help here' my two cents.
In our family we all watch the kids. I have several cousins who have kids, I have a doughter and son and my sister has a son and daughter. We have some kids with the same issues that you hinted at. If kids are doing something they shouldn't and Mom or Dad doesn't see or say anything, then ANY adult can "get after" (correct) them. It's a family thing thing, even if the kids aren't family and are friends of the family. Depending on the severity of the issue is how severely we get after them. "Don't bang on the toy, or you can't play with it" for a first offense. "I'm putting it away now since you couldn't respect it" for the SECOND offense, not third or fourth offense. He's your nephew and she's your daughter... Do what needs to be done.
For really serious offenses, I will take it up to the parents. "Dipstick" is something I would have handled the way you did. I normally call my kids over and tell them something like "I know Tommy said this in this fashion, but it's not really a nice way of saying it. Dipstick is a part of the vehicle, but calling someone a dipstick is a way if calling someone dumb. If it's the NAME of ONE car it's okay (for example: the movie CARS has some names that you wouldn't normally let the kids call others, but in the movie it's an actual name not a put-down), but if all of the cars are being called dipstick then it's not okay".
I know this sounds drawn out but I have fairly well-behaved kids because of it. It teaches them compassion and respect as well as giving them reasons they can tell others when other kids try to talk them into doing things they have been taught not to do.
Hope this helps others.
Donna :)