How do I tell my little cousin that she is being too neurotic about dating while also recognizing that she may just be very honest about where she's at and, in fact, really know what's best for her? For example, she's 25 and was horrified that someone who was 29 messaged her on a dating site because she thought he was "disgustingly old" for her.
The urge to tell someone, especially someone that you love, that she is wrong can, indeed, be overwhelming, but it's not always the right move. Who cares if your 25-year-old cousin is neurotic when it comes to dating? She isn't hurting anyone by having unrealistic expectations. Even if she were hurting someone, it wouldn't be you. If she's coming to you every day and complaining about her prospects, that's a different issue, but it doesn't sound like that's the case.
You have the opportunity to offer her gentle guidance, but I don't think, "Hey cuz, you're neurotic," is going to be productive for either one of you. Instead, you could say, "Why do you think he's too old for you?" or, "I have friends in great relationships with people older than them, and if it's the right person, it can work out really well," or even a simple, "What are you looking for?" These non-threatening words of wisdom from an older cousin may open up an honest conversation without putting her on the defensive.
You could also offer to look at her online dating profile. Maybe something in there will catch your eye as to why she's receiving messages from guys who aren't her type. Looking at her profile may also lead to a useful discussion about her expectations, her dating habits and how she's presenting herself. You may even be able to see some of the potential matches the site suggests, and you could look at them together and talk about the merits or problems she sees with each guy. By engaging her in these topics on her level and not on your level, you're more likely to get through to her about the realities of dating and to provide her with a more mature confidante.
I would be remiss if I didn't point this out, though: She's 25, not 17. She's not a kid, and she may really know exactly what she wants and not care at all what you think. Be prepared to be rebuffed as the clueless older cousin who's out of touch with the dating scene as she sees it. Listen to her perspective and her experiences. Acknowledge and accept that she may be extremely self-aware, even if it's not the kind of self-awareness you would choose for yourself or for her.
Even if you think you know what's best for her, she may not care. So until she asks you directly for dating advice, you may be better off keeping your opinions to yourself.