I wish you had a recording or transcripts of the session so I could be a bit more item specific vs. the cover-all manner this is going to seem.
When it comes to doing Readings I am far from the position shared by most in magic who love to place it all under the same nichel; categorizing it all as being fraudulent and explainable when in truth, there is far more to it than the Barnum and Forer techniques that have already been brought up. On the other hand, the scenario you've described is suggestive that something is afoot and the Reader is trying to do a bit more than a Reading... she's baiting your neice and trying to toss in the idea of mediumship as part of the session.
If I sit you down and do a Tarot Card Reading with you that is all I'm working with, the Tarot and my own intuition or maybe other esoteric sciences like Numerology, depending upon the length of the session. I'm not going to tell you that Uncle George or Auntie Pat is in the room with a message... that's show biz (most of the time).
Why did I make that latter statement? You ask.
Because I have had a few experienced where I was overwhelmed by emotions, sounds, smells and even "vision" if you would -- sensations that had nothing to do with using an oracle or any of the psycho-mumbo jumbo we all talk about and the results were some incredibly hard and accurate hits that I have no clue whatsoever as to how they were reached. What I do know is that the clients connected to what was being said, they more than appreciated what was shared and it was one of the ickiest and most hapless feelings I've ever known in my life. If this is what happens to so-called "Trance Channels" or "Mediums" they can keep it! I certainly don't like that feeling and wouldn't want to open myself up to such things on a steady basis... not for any amount of cash!
Now that I've said that side of things let me go a step further... In being around a good number of self-professed Spiritualists, Occultists and Witches over the years I've yet to meet more than a half-dozen (if that many) who impressed me enough in their accuracy and abilities to make me take a step back and say that something legit could actually be at hand... most of the time this is far from the case and the Readers are some of the worse and least accurate I've ever encountered. Hell, I people that can do a better job after working with me for a month let alone some of these "veterans" that claim to have been around forever.
So, to boil this all down to a point; chances are strong what you neice encountered was a fraud trying to put the pinch on her. Without being there or seeing/hearing a tape of the encounter I can't say exactly what happened, how and when but let's just say it smells too familiar. For a better sense of understanding just type in FORER EFFECT and do a google search, you'll find a ton and a half worth of free material on the topic. You could buy the book TRADECRAFT which offers a decent overview of this as well as the Barnum Principle and certain demographic factors that can help you out as well.
There are dozens of other tomes I could recommend that would give you examples but certain one's will mislead you or, more concisely guide you along a line of thought that it deliberately biased by the author in that they are a complete non-believer and in some cases, an admitted Atheist. In short, they have another agenda in mind and you need to know this prior to studying what they have to say. This is one of the reasons I rarely encourage a person in your position to read the Ian Rowland book on Cold Reading or the Brad Henderson book THE DANCE. They both give some very sound examples but they also miss the mark a bit due to existing points of personal bias. My personal bias being that we should be allowed some degree of fairness and choice when it comes to our beliefs and spiritual perceptions when set against a supposed frame of scientific factors... Always reminding folks that the good guys at CSI Cops had to falsify their one and only legitimate Scientific bits of research so as to negate findings that went against their agenda (in other words, the tests were proving the existence of things paranormal/esoteric)... at least they were honest enough to admit such and didn't run away from such challenges (unlike others in the skeptic's world)
So the bottom line is, do some investigation but do it with an opened mind. Know that the odds are grossly stacked against this Reader when it comes to any sense of legitimacy and to wrap your head around the vastness of this field requires a lifetime...

... wish I could have been of greater assistance
