Whew!
Firstly, your niece is very lucky to have you around.
Is this young lady baptized? Does she want to remain a JW? Bear in mind that there are no specific DFing offences - if the elders want you out - you're out. What would the consequences be? Is her mother likely to shun her? What are your niece's immediate plans? Is she going to college? Does she have a job?
Her mother's melodramatic response is to be expected - remember everyone who is not a JW is depraved, untrustworthy and about to become Birdfood(TM) Real Soon Now(TM).
18 is the age to be enjoying light romance and fun while you start to carve out what path she wants to take in life. I don't have any kids, but I think 18 is old enough to decide if you want a boyfriend, and who he'll be.