I want to say, you are very thoughtful to keep your mom's holiday spirit alive.
How about a very soft, cuddly animal and if possible, a storybook about that same animal? You might not find these as a set but might have to do some searching. (There are sets out there you can buy together, too, but you might or might not find one that appeals to you--some tend to be a bit, well, "Hallmark-ish" for my taste and the books aren't the best quality.)
For instance, my daughter got a gorgeous, extremely soft and huggable rather realistic little bear (not too large) a few years back, from the toy company Ditz which does terrific animals. I can see pairing that toy with a kid's book about a bear. There is "Brown Bear, Brown Bear, What Do You See?" by the fantastic Eric Carle, or "Bear Stays Up for Christmas" by Karma Wilson (Wilson also wrote the adorable "Bear Snores On" which your niece would love too).
You get the idea. A cuddly cat could come with a cat book. Or you can get her any (or several) of the books about cat character Skippyjon Jones (hilarious, and your bookstore will know what you mean when you ask for it). There's a Skippyjon stuffed toy out there somewhere, I'm sure, though he's an odd-looking fellow! Skippyjon may be a bit "old" for her, for another two or three years, though. It might be more fun to make your own pairing!
If you live close by, then be sure you give her the gift in person and sit down and read her the books right then and there!
You can never, ever have too many books, from birth onward for the rest of your life.
One other thing: Please be sure to gather, now, as many photos of your mom as you can. Make scans, make both paper and electronic versions. Start a photo album of grandma with your own captions explaining the pictures in a kid's terms. Then give her that -- in a few year's time, not at two. Keep adding to it. Maybe make it a gift in late elementary school when she can better understand it. It will be invaluable and you and your sibling(s) can all have those photos as well.