I would still say that Christmas is less of a continuation of older pagan holidays and more of just an usurpation of the date. With the regular Halloween, no, I doubt the Celts of old went around dressed up as Witches, Red Rangers, or Recently Shot Abraham Lincolns. However, you can’t deny that a large portion of the dressing up for Halloween centers around typically Hellish icons. There’s a rather large difference between such celebrations on one old pagan holiday and the religious celebrations on the other (or, in the alternative, the decidedly non-hellish secular version of Christmas).
I’m not endorsing your sister’s parenting methods. I’m just stating that there is a distinct difference between turning one old pagan holiday into pretty much a wholly secular one with what some people term hellish imagery and another holiday whose date was merely co-opted for an entirely different, and originally wholly, religious celebration.
Also, I don’t care about All Hallow’s Eve. As stated before, I’m not a papist. I don’t care for none of that saint worship.