I've never coached volleyball, but I have coached other sports. I'm wondering if there's a different reason behind the softer serve besides letting the other team return it? Sometimes, a coach will make a player seem to go backwards to improve basic form and essentially relearn the skill the proper way. It looks like the coach is hurting the kid's ability, and the kid inevitably feels that way, but ultimately, the promising player will become better for the back to basics play.
Oops, just noticed that you wrote your niece is a soph and plays JV. Sorry, I’ve got to read more closely.
If that's the case, the coach really needs to let the player know why this is being done. You may be completely correct but, without the player knowing the reason for these moves, a lot of confusion and animosity is sure to result. (While my coaching experience is extremely limited, I have used the "go backwards a little to go forward better" approach a few times.)