Leslie,
UGH! People deal with things in their own way, I suppose your roommate approaches it her own "special" way.
How much longer do you have to live with her?
I think all your points are very valid. Your roomie's lil' is old enough to choose who to live with next year. Her lil' isn't "property" owned by your roommate. Maybe she feels you'll take her lil' away from her. Sorry to tell her, but just because you have a little sister, it doesn't mean that she'll be the #1 closest friend- it just doesn't work that way.
Your roommate sounds stubborn. lol. Maybe you could say something like "I didn't mean to upset you..." and go down your valid points. There isn't any way she could say anything to that. :P