S.,
I did that with baby #3 and #4 and it worked fine. We put the newborn in a cradle outside our master bedroom door at night for the first 8-10 weeks until they were sleeping through the night. Newborn napped in the bedroom. When newborn was old enough to go all night, or close to it, we moved them into big sister's room at night. Early on, we put big sister to bed first, waited for her to fall asleep, then put baby to bed. As they got older, then we would put baby to sleep first, then big sister, but we always stagger the bedtimes.
We now have a boys room (age 6 & 4) and a girls room (age 8 and 2) and we still stagger bedtimes. Younger ones fall asleep while mom has time with older ones, then older ones go to bed. I just trained them to leave their younger brother and sister alone and sneak quietly into rooms to go to bed. It really has been fine.
Occasionally, our baby would wake up and cry during the night in the room with big sister. She slept right through it even though she is a pretty light sleeper. It really wasn't a big deal. My daughter's biggest complaint is that her room sometime smelled like poop first thing in the morning or after naptime because baby would fill her diaper as soon as she woke up. Now the youngest is potty trained so it is no longer a big deal.
I don't know how long I will keep my girls together. When my oldest hits puberty, I may let her take over the guest room to give her more privacy since there is such an age gap between the girls. But they get along really well now, so maybe they will want to stay together. Who knows?
Good luck,
S.