Eventually — meet her, tell her the truth, let her know that you love your niece anyway, and see what develops.
For now, simply tell her that you’re open, but not yet ready, that you need time to process the new situation. Encourage her to call in some period of time — perhaps 6 months — to see how you’;re feeling then.
When you do meet, do it in a semi-casual situation. Have lunch, somewhere neutral.
If you close the door, you’re the “bad person”. You might develop a great relationship. She might be a great person like her brother. Or maybe not. But you don’t know until you meet her.
However, if you’re not ready, you shouldn’t force yourself.
Very wise.