Is it against "baby name etiquette" to use the same first name my brother & sis-in-law chose?

There is nothing wrong with siblings using the same name for their children. What an honor it is to your Dad too! Your sister is using a different middle name so the names aren't exactly alike. I don't know what your Dads name is or if there is a nickname ociated with it, but even so, cousins having the same name should be no problem. I have two sisters who both have sons named Daniel. One goes by Daniel, the other by Danny. Never been a problem with my sisters. :-) You are 'allowed' to use whatever name you choose.