Oh Bumps, I've only just seen your post, so so sorry you're struggling. I found it very hard adjusting to 3 children and we didn't have illnesses to worry about and I had loads of help from my mum so I can't imagine how hard it must be for you without the support of your family :( From what I've gathered from the 2 times I've met you I'd say it's very much their loss. Don't worry that you're a bad mum, of course you're not, you're under a huge amount of pressure and you've had bad experiences lately that are bound to exhaust you.
Re DD1's reading, could you speak to her teacher and ask if she can have a reading book anyway, it might boost her confidence and get her interested in it again? My 2 have had reading books from day one when they didn't even know their sounds, let alone doing blending! It's perfectly normal not to be able to read at that age though, I worried that DD1 wasn't keeping up with her friends (and she's the oldest in her year) but in the first term of year 1 she jumped up from level 3 to level 6 in 2 weeks. It's like when they're learning to walk and talk - they all catch up in the end.
Is there anything we can do from far away? (why can't you live closer! 
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