It doesn't have to suffer...all of you are adults and in the adult world we handle things different. It does need addressed. You need to sit down with your brother and explain to him that this is a problem you'd love to help your nephew and for now on if he's to play with your child, you will have to tell him no dear we share or no dear we don't take things off others plates.
All along it may have been better to do this and is when your child is with other children. Don't be afraid to tell someone else's child no dear we don't do that...whatever it is then bring it to the parents attention. Mainly when it involves your child you need to step up for him in theses situations. even with strangers, classmates etc. I have 3 boys and they are 9,7 6 when someone is at my house I still make sure things are fair even with the other kid, I don't let the other kid get away with something or my own kids.
Dr Sears has some great advise on behavior if you want to start some research on line. I do believe when you are with your nephew and he starts to take something from your childs plate, I'd stop him be right there remove his hand and say his name then no we don't take others food, redirect his hand back to his plate. Same with toys etc sounds like you need to take control and sit in on play time as well, someone needs to teach him how to play, this really isn't something a child learns on their own, not really ask any prek teacher.
If this can't be resolved by adult communication and an adult taking charge over this nephew you may have no other choice other to then find some new playmates for you child. After all your child and is developmental situation is what you are an advocate of. Your nephew's interest should be of his parents as well, teach him to play well with others etc.. Sorry in life as we get older and have kids sometimes we have to make real boundries and lines with our siblings and their family.
best of luck to you