Buddasingh phaji made a good point by suggesting making a presentation at your nephew's school.
I did the same with my children, each one of them i went to their class in their first month of kindergarden. I was really worried about the boys getting bullied.
Here is what happenned with my younger one (he is in kindergarden right now)
I just talk in simple language (coz they're 5yrs old!).
First I ask them: what is this?(Pointing to the joora), Is there something inside? A surprise? (all the kids laughed)
One kids said: i think it's hair
Oooohh i said, why don't we see. I then proceeded to undo his hair (some might not agree with that but i thought it was a good way to educate)
While i was undoing his hair, i talk about why we keep hair, it's part of our religion and culture (many kids at that age don't even know what religion is!)
All the kids were so impressed by the length of his hair. I told them we fix his hair in a joora everyday so the hair keeps nice and clean and nut free (while i was redoing his joora)
Then i talk about the turban and showed pics of sikh men.
I also talk about the kara and brought an extra one to pass along the kids to try on.
I also brought a baja and my son played a few shabads (kids were impressed and i think it helps the other kids have more respect becasue it's something they can't do)
I brought a pic of harmandir sahib (from an old calendar!) (all the little ones were so cute with their aaah, wow, it's all gold!)
And we ended by giving them kir (without almonds) yum!
He doesn't have any problem with bullying however, the situation is a little different from your nephew becasue my son has only one other punjabi kid in his class (there are less then 10 punjabis in the entire school and only 2 with joora, my sons)
But yeah in a nutshell i think making a little presentation to the classroom helps (for non-punjabi kids at least)
Let us know, it makes me really sad when a little child so young as to go through that.