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Is it tied to the account, the hardware or both?
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I'm sure that it is connected to the hardware. But I'm not sure about the account dependency. I think if it has been downloaded onto the Kindle and after that you deregister the Kindle and register to another account, the azw2 won't be deleted.
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Will she be able to restore the apps through USB
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Good question, but I don't know because I don't have two accounts with the same active contents on both accounts. But I think they aren't tied to the account but rather to the hardware.
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was planning to give it to my niece.
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Well, it might be a solution to make a child or another adult account (depending on her age) from your own. It's in "Households and Family Library" section under Settings. So it would be the same household from the Amazon's point of view. Then I'm sure she can register your Kindle to her Amazon account and will be able to download your Kindle library content as well.