Welcome and I'm glad you posted!

Oh man this is tough. I'm so sorry for you and those kids, and also for your daughter. The kids are the most important thing and if you are not able to care for them in the manner they deserve and they will be happy with your niece then that is what is best. They are lucky to have family who can take them all together so they do not have to be separated. Your feelings are valid on all counts. You need to also take care of you to be able to support your daughter should she one day decide to get help and those grandkids, as I'm sure (or I hope) you will be a big part of their lives even if you aren't the one raising them.

Have you sought out help for you and the kids? The kids in my opinion will likely need therapy to deal with the issues and transition to a new family. You could do whatever is comfortable for you - al-anon (or other similar group setting), counseling, reading books, seeking help here, etc. How long has your daughter been using?

My prayers are with you all.