Wow, Mom, my heart goes out to you. As I read your story, I thought, Oh, my gosh, what can I possibly say? You have your hands full, and I felt at a loss to have anything worthwhile to say -- then a wee little alarm went off -- is your daughter jealous of the 2 year old ? Or, perhaps not "jealous" as such, but feeling as if she's not getting her fair share of attention?
Kids at that age don't know why they do what they do. They just do it, and reap the consequences, and she probably feels lost just like you do. She wants something, but she probably doesn't know what it is. Unfortunately neither do you, and it's so hard to want the best for your child and simultaneously see her world deteriorating before you eyes.
So I would recommend that you not ask her if she feels jealous or if she misses being the youngest. I would simply see if I can re-arrange life to have a few hours a week of "me time" with your troubled daughter. Get home an hour or so early from work, while the little one is in day care, and say, "It's a nice day. Come with me. We are going for a walk." (Are there any walking trails or cool places nearby? summer is perfect for it.) I wouldn't give her a choice, just drag her along. Do you need to get a gift or something for somebody? Drag your older child along -- "I need help picking this out. Please come and help me." Don't say, "would you? or can you," no options, a forced choice.
If there are things she enjoys doing, maybe you could pick some of those, and do them WITH her. Pretend she is the 2 yr old for a while, because in our emotional lives, we are all very young still, and we all want our mommies to spend time with us, especially when we are facing having to grow up and we don't know how to do it.
Above all, find times to tell her you love her. Hug her. When she attempts to do something, win or lose, find something she did right, and tell her you were very proud of the way she tackled it and how she stuck to it. Help her to take pride in being who she is, and she will become someone she wants you to be proud of. In spite of all the peer stuff, you are still her number one fan, and the one whose love she most covets, and will for life.
Talking to a therapist can be very very helpful, but the reality is that the person she most needs to be able to talk to is probably you. She just doesn't know how to go about it, because she understands that you are busy working, taking care of the baby, etc.
So, make times to be happy together. To create positive interactions. Does she like to cook ? How about she cooks, and you clean up afterwards ? Does she like photography ? An inexpensive digital camera can give you opportunities to go look for cool things to photograph -- a family outing to the zoo, a trip around town looking at interesting architecture -- I had a friend who did a whole study on "doorways", for a photography class, taking pix of gardens, it would create a whole lot of outings, and time at home for her to work on her pix on the computer. then you have something to ooh and aah about, and she can take pride in it.
Would she like to learn to ride a horse ? My 2nd daughter had to move with us at age 14, and the home we rented had a barn on the property where the owner kept her horse. Kathy never rode that particular horse, but the owner let her go to the barn and groom the horse regularly. Whenever kathy needed time away from Mom and the babies (then ages 2 and 4), she went to the barn, groomed the horse and talked to it all about her life. I could have learned TONS and TONS if I'd had a tape recorder somewhere in the barn. But it helped her to cope with life. And riding became a passion of sorts -- during college she worked in a riding program at a Y camp, and ended up with them paying to send her to be certified to teach, and then she was the riding director.
If you help her to explore areas of interest -- even redecorating her room, and working together on it -- and you do some things that are just the two of you, then you will be able to also do some things with the 2 yr old in tow that won't intrude so much on her feeling special. Also, she will be able to go places on behalf of the 2 yr old and see it through younger eyes, and have fun doing that, too.
I may be full of hogwash. but it sounds as if nothing else is working, and maybe a whole different direction might help. Scheduling it is tough these days, but do your best. When it is all said and done, we each do the best we can as moms with the gifts and talents we have, and we pray that it will be enough. I hope and pray that this is a stage, and things will begin to work out for the better, but even if it is, the time you spend with her, loving her through it, will be helpful to her as she grows, as she becomes and adult and as she looks back and realizes how much you truly have loved her over the years.
Best of luck ! and, Godspeed to you !