Awww warpig, that isn't nice. Interfering relatives can be a right pain, especially if your fiance doesn't stand up to them on your behalf. I do think however, rather than alienating his sister, you should let this one go and if you don't like what she has done, change it when you get there. A quiet word with your fiance would be a good thing too. Once you have moved in, he needs to tell his sister in a nice way that her decorating skills were appreciated, but are no longer required! He needs to tell her that you two want to put your own mark on your first home together.
Personally, if I were engaged, I would not look upon my fiance's house as mine. He is the one who has paid the mortgage or paid for the property since it was bought and so it is in reality HIS house and I personally would not feel comfortable viewing it as mine. Perhaps after living in it together for quite a while ... but certainly not at this stage. But that's just me ... This has nothing to do with the decorating and his sister though. You are perfectly right not to be very happy about him not standing up to his sister after you had expressly asked him to. Make your point, but don't be too hard on him. I hope your move goes well and wish you both many years of good health, happiness and fun together. :o)