Just a different point of view here, and obviously only you know what your sister did, so I can't comment on that.... but, my siblings and I all grew up without knowing any of our cousins. We have 5 in total, and both my Mum and Dad stopped contact with their siblings, and therefore their kids.
I hate that I have cousins who I don't know. We have seen each other briefly at funerals, and unfortunately all my grandparents are now dead, so I don't think we'll be seeing them again. My cousins are all nice people, it's interesting to see the similarities, but that's as far as it goes. I definitely think I've missed out not having them as I grew up.
If there is any way you can move on (not necessarily forget but allow the relationship to reform) then I would for the kids. That being said, even people who grow up with cousins aren't close, so who is to say that your kids would be missing out.
Good luck with the decision!!