Can my mother be allowed to make decisions if my brother has power of attorney?

My grandmother, dying by bits and pieces in a NH, directed my mom (her POA) as to the disbursement of her valuables. Mom was pretty stressed out by this, as Gma had some lovely, expensive things and there was no rhyme nor reason as to what she gave away or why.

In the end, she was deemed competent and mother did her bidding. It actually turned out fine, as she was calmed by the knowledge that the things she wanted to be gifted to certain people actually happened. (I remember well, because altho I was helping mom do all this, I inherited nothing.)

It was calming to mom, but there was a part of me that thought "what if we need those rings to sell to help care for Gma?" I never spoke those thoughts to mom, she didn't need the stress.

Certainly your mother can make her own decisions, if she still has the faculties to do that. Having POA doesn't mean the agent can usurp the authority of the principal unless she is incapable of making her own decisions, or if she cedes that responsibility to the POA. If she can still decide who gets what, your brother is acting prematurely, unless she has said it's OK for him to do that.

If your mother still recognizes you, and understands you are her daughters, yes, she can give away these things to you. Only if an executor questions your Mom's decisions (say gifting you sums of money) and she is judged incompetent by doctors, should he interfere with your wishes. When my brother, who I was POA with, wanted to make a gift of 2,000.00 to a charity I discussed it with him. He was competent enough that he understood what the charity was and what they did, but not able to explore what their assets were on something like charity watch. After I discussed with him their assets, the salaries they paid out, the amounts they spent in fundraising he decided against this gift, but had he still wished to make this gift I would have done so for him. The POA is in charge of doing the bidding of the person who appointed him, and of deciding what is in the best interests of the individual if that person is incompetent. So if the POA understands that your Mom wants you and sister to have these things he can distribute them.
Now as I understand it you and your sister already HAVE this jewelry, given to you by your Mom. That means it is yours. You may keep it. However, if your Mom asked YOU directly if you would be so good as to give some to the granddaughter I would hope you would. The brother can "ask" you to share it, but if it was GIVEN to you already, it is yours to decide.
So when you say "he says he can give away things while she lives", that is true if she asks him to, and that is true if she cannot make any decisions for herself, but that is momentos and things. Not VERY VALUABLE jewelry that may still be needed BY her FOR HER CARE.
So I am thinking now this is clear as mud, right? Anyway, end of life stuff like this, when it comes to "stuff"? My opinion is that no one makes trouble and angst for the end of a seniors life. There doesn't appear to be any fraud or cashing in of a seniors estate or gifting here that I can make out. But you could remind bro of the dangers of valuable jewelry, anything looking like gifting, fiduciary duties and so on.
And as I said, if Mom is competent enough to recognize a friend and wish her to have a momento, she should be allowed to distribute that now while she is living.