I feel for you! Sibling squabbles are natural, but not insurmountable. Kids will do the most natural thing unless they're given some alternatives that pay off in a way they can understand. Behavior then becomes habit, and it's probably more irksome for you than for them. When they get use to operating under the new alternatives, they will hopefully replace the habit they've formed so far. Figure out what you can use for a treat that can be 'broken up into small bits'. If they like sweets, get some that come in small pieces for this. Or those Crazy Bands? Whatever you choose, place about 15 pieces in a container they decorate or something special and personal for them, so that they feel like they're taking part and 'owning the solution' somewhat. You want them personally invested in this. Before you begin, explain that those things that now lead to squabbles and hurt feelings can be handled in a different way that will help them and you to feel happier, instead of annoyed. Give them examples from past squabbles they might remember, saying, "This is the way you handled it. How did that feel inside? Did it make you happy?" and then, "Instead of that, this is the way I want you to handle it'.... (It would be very helpful to practice with pretend situations and good resolutions at this point, even if it turns silly, so that they can start on a successful, hopeful place to reference back to when the decisions have to be made). 'If you handle it the happy way, I'll put a treat in your... (little jar, or whatever). If one of you tries to handle it the good way, but the other one doesn't cooperate, only the one who tries will get the treat. If you squabble and bicker instead, you'll both have one the treats in your jar taken out. At the end of the day, you'll get your day's portion of treats. If you handle your diffrences well, you'll both have treats and we'll all be happier. If you don't , you'll have no treats, and your hearts won't be as happy. If you don't know what to do, I'm here to help you so you can keep your treats and be happy.' Tell them you know they can do this, and that you're looking forward to them being the best of friends and enjoying each other a lot more.
As a side, I was the middle one of five kids, all of us 2 years apart. When you're stuck together all the time, it's easy to squabble, and it really takes a parent's wisdom to step in before things even start, if they can. Sometimes, we really had grievances that either we didn't know how to handle, or that we felt we weren't being considered for some reason or another. And at other times, we squabbled because we were bored and didn't know what else to do. As the mom, you have your hands full in this. You could head off some of the squabbles by noticing where they originate, and heading them off before they become a squabble. ie. if boredom is a trigger, give the kids a job to do and reward them for doing it under a certain amount of time. You all win. Or engage them in a game they both like. Also, you can teach them to not only settle squabbles, but turn everything even more positive, by showing them how to gladly share, help, serve, be sensitive to, and show affection to each other. Having a sibling so close is great training for life, either way they live it! I hope your home gets more peaceful soon!