wow, sounds like a real barrell of laughs. Much sympathy. I have 3 so we do have the occasional disputes here too lol. Random thoughts, not in any order.
Need to try and sort it out w. dh. Dh's do sometimes seem to find this difficult, like you say, you're there much more and maybe see it a bit more realistically. My dh had a younger sis, sim ilar gap and by the sounds of it similar situation. He was (still is) very bright ( tbh more so than her) and he'd torment her and she'd fall for it every time but then she'd do the little girl big mean brother act and I'm sure dh came off worse. Poor dh. They are great friends now tho.
ENough rambling. Read siblings without rivalry by Faber & Mazlish. Very american but I found it useful
I also find it help to leave them to it (obviously violence can't be left, but if 1 runs to me I just sound bored and ask if they've already tried to sort it out themselves).
Have you tried the much- loved mumsnet pasta jar? I got a big bag of peppbles, so we have stones in our house. Rewards for good behaviour etc etc. Mine were getting really annoying with each other recently, so I reintroduced the stones. If I catch them even talking nicely to db they get a stone. If they're mean to db I give a warning and then they don't just loose a stone, they have to give one of their own stones to db. You wouldn't believe how nice they are to each other all of a sudden, lol. Seriously, much nicer and makes them think. Ds1 started with his sarcasm & realised half way through and said ooh, sorry, sorry and stopped himself mid sarcy comment. I thought that was really good, shows making them much more aware of own behaviour.
When they go through these phases, they just get into a mindset, force of habbit. I also had a big talk & explained that I loved them both very much and it really upset me to hear someone talk so horribly to someone I loved so much, but that it was their own sibling was even worse. I did this seperately. Seemed also to have helped.
Also more 1-2-1.
hth