You daughter is only 3 years old. Why does she have to kiss and hug people goodbye? Why is it not acceptable to just say goodbye? It doesn't matter if it's a family member or a stranger. I never forced any of my kids to kiss and hug anyone goodbye. Not even grandma and grandpa. If they wanted to, they would do it on their own. And most times they did kiss and hug. But there were times they didn't want to. And that was okay. I would simply ask them if they wanted to say goodbye to people and let them choose how to do it or not. That's not being rude, it's being a kid!
I don't think you are "totally off the mark" with this, you have to teach your daughter some manners. But you can't force some things on kids. They learn more by example then by force. And if your sister doesn't understand it, that's her problem. She's the adult and needs to understand that children have a mind of their own and will not always do the things their parents want them to do. Or feel about them the same as their parents do. And they have a right to their feelings, too. Who knows, she may not like your sister as much as you do. After all, she don't talk on the phone with her everyday, She didn't grow up with her, she is not her best friend. That's you. Not her. It could be for any reason. Maybe she doesn't like the perfume your sister uses. Or how she hugs. Or the outfits she wears. Or even the tone of her voice! Kids see things in a whole different way then adults do.
Don't force her or punish her for not kissing and hugging auntie goodbye. Ask her (don't tell her) if she wants to say goodbye and if she does, praise her. Maybe she just wants to say "goodbye" or just hug, or just kiss. Maybe she doesn't like kissing or hugging. Or just wants to wave goodbye. And if she doesn't do anything, just leave it alone. Maybe next time she will do it. After all, she's only 3 years old.