Momo's sister clearly has a complex. The kind of complex where she would throw a fit if it was a woman(which is the truth) who is taking her older sister's time, but would not care if it was a man doing pretty much the same(and she would get more altered if she find out that the woman Momo is meeting is a younger lady with the same name as hers).
The point being, she would not want another woman to occupy a place of importance in Momo's life, feeling possibly threatned by her. Based on that, we can assume she would react badly if the truth ever found its way into her perception. I assume she would act like a homophobe more out of fear of being replaced than real spite.
A lot of people would react just like that without having any romantic interest. I really don't know why people keep trying to romanticise relationships between siblings, specially female ones. I can guarantee thats not how it works.
Women are way more free to express affection between themselves than men - it doesn't mean that one must act affectionatelly, just that women could do it with less of a problem - and Momo's sister fits perfectly into that. Hell, even between siblings of distinc genders it isn't unexpected, although, as they age, it becomes unlikely to happen due to embaressment.
Personally, I always had a very close relationship with both of my brothers, to the point a lot(and I really mean a lot) of people would mistake me as their girlfriend, since I always hug, kissed them on the cheek and have no issue in being close. Its quite funny since I really don't get jealous of them. However, if the three of us were characters on a manga or anime, I'm 100% sure there would be weirdos shipping us like creeps just because we are kind to each other.
Anyway, I still think the brat will be even more nosy and irritating. Who knows. Maybe she will threatnen to expose Riko as a way to "protect" Momo, even though the real reason is her stupid fear of being replaced/bigotry.
