It seems like one take-away is that this is fairly common @Wind-Up Rex, and that it's likely your sis will come around with time.
So really, instead of trying to rush or force the issue, I'd just try and feed her as much valuable information as I could until time does it's thing. Not lecture her, mind you, but simply have 2 way conversations where you try and slip in some of the joys and dangers of dating. In particular, I'd try and find a way to have a conversation about what she thinks makes a man a good dad, and how those traits might express themselves in a early to mid 20s single, childless male. Not all of them are sexual turn-ons, so it'll be good to give her time to process that into her Fi model so she's equipped to make better decisions later.
Something else - is she in college? Perhaps part of the problem is that she's disgusted by the hook-up scene, and so rebels into her fantasy.