I hate to say it, Jason, but if he were my brother, I would've done the same thing, except that when the kid wasn't around, I would have taught him a lesson in familial respect.
Hang in there Jason, as your nephew grows older, he'll likely contact you to help him escape from the miserable upbringing your brother is likely to give him as a result of his cult membership. I know, because I contacted my uncle for help in dealing with my parents and their cult. He was always there for me and my father had no choice but to deal with it.
Don't let your weak-minded brother win. Make yourself available to your nephew at every opportunity, and disregard the vitriole that spews from your brother's mouth. Your nephew will love you for it, and your brother, at some point, will have to deal with a son that loves his uncle more than his dad.