Thank you for the information and your question. To answer your actual question, no, assuming that your brother would qualify as a dependent of his daughter's he would be giving any of his income up unless he wanted to. That said, unless she misrepresents the facts to the Service she is in, he will not qualify as a dependent.
In order to qualify as a dependent, when not a primary dependent like a minor child or a spouse, the dependent’s income, not including the member’s contribution, must be less than one-half of their actual monthly living expenses; and the servicemember’s contribution to the dependent/household must be more than one-half of the dependent’s actual monthly living expenses. Supporting documentation of living expenses and the servicemember’s past contribution to the household expenses of the dependent is always required. So, that is why it is doubtful that your brother's daughter will be successful. However, if she is, then as I said, what he does or doesn't give to her is between them.
You can see a very good discussion of what is necessary for "secondary" dependency in the military (all Services go by same rules) by going to: http://www.public.navy
Please let me know if you need any clarification. I would be glad to assist you further if I can.