How nice of you to be concerned !
Please tell your sister-in-law to get in touch with La Leche League. She can attend local meetings if there is a group nearby or look at their website or talk to a leader by phone. Their phone number is 1-800-LALECHE. If she calls she will receive phone numbers of leaders in her area. Beleive me, MANY breastfeeding moms have had this issue!
Since her baby is still very small, once they get into the swing of nursing she will be able to hold the baby while nursing and put her other arm around big brother. (at least sometimes!) She can talk or sing with him while nursing, maybe even read a book if he holds it. Maybe have a toy he can play with only during nursing times?
Eventually baby will not nurse so frequently or so long at a time.
He can still participate in feedings. If Mom uses a burp cloth for the baby, big brother can hand it to her. Many nursing moms get thirsty (and it is important to keep hydrated to keep up milk supply) so sometimes they have a glass of water nearby to sip on while they nurse. He can hand it to her. (Yeah, maybe she could have it in a sippy cup if spills are a possibility--I bet big brother would get a kick out of that!) If baby kicks off booties, big brother can pick them up. He can tuck a blanket around baby's legs if baby might be cold.
This is a good opportunity for "daddy time" with the older one. Then when mom can lay baby down, she can play/cuddle with him. Let the housework slide a little, the kids are more important! and if anyone says "What can I do to help?" by all means TELL THEM! if that means cooking meals, cleaning, taking big brother to the park, watching baby so mom can take big brother on an outing or walk, whatever!
did she nurse the older one? She can remind him that when he was the baby she fed him when he needed it so it's the same with the new baby. I know, he won't necessarily understand that but it can't hurt to try.
This is a big adjustment period for any family regardless of how they feed their baby. It may take a little time but they will manage it.