You say she doesn't know what to do anymore, but you never mentioned anything she's done! With violence, the first time it happens, this becomes an emergency situation. If your sister let her beat her younger brother more than once, that younger brother is going to grow up an angry teen.
I do have 2 other questions. Is her dad in her life? Also, was this a sudden change, or has she always shown signs of rebellion, etc?
I ask because if it's sudden, you cannot discount the possibility of drugs. Even small towns can have a secret hs drug ring and I've read numerous stories where this happens. If it isn't sudden, your sister waited too long to address it.
If I were you, I would tell her it's time for a nuclear option. She needs to call the nearest hospital with a mental unit and ask how she can get her daughter admitted. Most are willing to come to the home and "extract" her safely and this needs to happen. Then she needs a thorough physical and mental evaluation.
This sounds extreme, and in a way, it is. But your question reads as if she waited too long to act, or tried the wrong things (like yelling at her). Violence in teens ALWAYS escalates, and the next time she pulls a knife, she may use it. Your sister might need a wake up call.