You know this reminds me of a recent stop at Gamestop.
I stopped to put a little money down on my Infamous preorder (I loved every Infamous game and I am NOT missing this one) and there was a woman with her seven year old son who was looking for a game for him. Now, the employees were all trying to help her find a game that they felt would be appropriate for such a young child who owns a PS3 and 360, and I tried to help as well. It was perfectly obvious she didn't know what was in the games, but made it clear she wanted to avoid anything with too much shooting people. It was quite annoying as there were several cases where I wanted to recommend a great game, but realized it might be something that she wouldn't want him playing, and the employees seemed to share that sentiment. At the end of the day, we did find some things for her son, and I would say it was a good experience for all involved.
I bring it up because sometimes you do need to help people who really don't know what they are buying. I've seen a woman with her young child buy Dante's Inferno. And what really got me was her looking at the back and objecting to the word "Hell", but buying it anyway. This woman's kid was young, she was obviously going to object to the game's content, but still bought it, probably due to the fact that she didn't even bother to read the ESRB description. It was maddening, and I commented to the clerk that she was going to be returning that game before long and he agreed.
In case you're wondering, it's because I saw that woman buy Dante's Inferno that I do get involved with people buying games for their kids. Because I don't want someone to buy a game from a position of ignorance and then get mad at the game or store, when it's their own fault.
Did you overreact? Nah, I don't think so. You informed your sister of what was in the game. At this point, it's all on her. If she finds the content objectionable, she can't complain that she didn't know. At the end of the day, it's her child and her decision on what she buys for him. And she probably knows her son better than you, so she probably knows what he can and can't handle. Hopefully. I wouldn't allow a kid to play GTAV, but I don't think he'll go steal cars and beat up prostitutes. At least, not because of GTAV.