why would he only be drinking milk and eating baby cereal? is there a reason behind it or is that what the parents chose to do? has he been to a doctor? was this diet under doctors orders? i need more info regarding the nutrition as that is certainly not normal. if he has never been given any other food besides the above then that is the reason why he cant chew or swallow correctly, but if he had a chewing/swallowing problem and the doctor precribed this diet, that is a different story. as far as development, it could well be from lack of nutrients or vitamins but again, the development issue could go hand in hand with the chewing/swallowing issue if he's always had this problem. def sounds strange, but maybe with more info, someone can help you out....
You should try posting on the new child nutrition board.
that is a touchy subject. its your nephew, but is it your brothers child or your sisters? I hope it is your sisters because she would probably take it better then if you had to tell your brothers wife (sister-in-law).
What you are discribing is something a lot of parents do. They give their child mostly milk, and the child won't eat any healthy food. The problem with this is the child will be low on iron if not getting enough nutrition.
You said that they give him milk with gerber cereal out of a BOTTLE? Heres the thing some parents don't take away the bottle mostly because the child will through a fit about it and some parents don't want to deal with that. Most children are off the bottle a little over a year old. Some even at a year. It is not exceptable for a child to be using a bottle at the age of your nephew. The problems this can cause is social, oral issues. Which this might be why he has problems talking.
Have you thought about maybe turning the lights down a little and giving him something to play with while you read him a book? Some children are more active then others, and to get them to sit still is hard.
You must decide if you are willing to get a family member upset with you, because there is a chance that this will happen. No mother likes to hear someone say that they are doing something right in regards to their child. BUT, in extreme cases like this, you might want to be the voice for your nephew and speak up about it. You may get them upset, but for the sake of your nephew, I would probably be the butting in person at this point.
The best way to do it is to make sure the parents know that you aren't judging them. Go out and buy your nephews some kids cups with spider man on them with the cool straws, you might be surprised how much your nephew likes them. The eatting issue, you can also buy him the matching plate.