OP I've just booked a holiday to the Canary Islands for me and my 7yo dd through Sun Master. I got two weeks half board with flights, luggage and taxes for just under £700. I paid half as a deposit and have until May to pay the rest up (we go at the beginning of July). DD stays and eats for free, so I've only had to pay for her flight and luggage. I can't really afford it this year, but I haven't been abroad for 5 years and I was adamant we were having a hot beach holiday this year. I'm a single parent too and I work bloody hard - I needed a holiday this year! 
Bear in mind that you won't pay anything for your 1.5yo. She's under 2 so fly's for free and I don't suspect you'll pay much for her to stay in a hotel. A lot of holidays on the website I mentioned above offer child free places (hotel stay and food), so do have a look and see if you can grab a bargain. Because of their ages you shouldn't be tied to school holidays per say, so booking for the end of June/beginning of July will save you hundreds as the English schools haven't finished for summer.
If you can't stretch to a holiday abroad, check out the likes of Butlins and Haven, etc. I took dd to Butlins for a week at the beginning of July 2013 for £350. That included accommodation, food, entertainment passes and our train tickets down. Some folks might turn their noses up at Butlins, but we've enjoyed it both times we've been. It's cheap, you're always right next to a beach and the entertainment for the kids is fantastic.
You can pick up Haven holidays very cheaply as well and you'll only pay for the caravan - not per person. So if you had some friends/family that wanted to go with you, it would cost even less if you were to split the cost down the middle. We've got a 6 person caravan over on the east coast booked for the April half term that cost £320 to hire for the week. It is only dd and I going, but it would have cost £320 for 2 or 6 of us, if that makes sense? Again, the Haven parks offer children's entertainment, they're near a beach and I think they all have an indoor swimming pool.
Holidays are what you make of them. They don't have to be anywhere fancy - it could be a caravan park right up the road from you as long as you get away from the drudgery of every day life and just enjoy the break
Personally, I would want to take both children and make the memories of having them both with me. But it's up to you at the end of the day. You do what feels right for you.