i like the first part: I wonder if you two can treat the sniping and the general resentment-through-cabin-fever as a totally understandable symptom of being cooped up together almost every day, rather than a terrible and shocking development you can’t acknowledge without permanent estrangement.

but i'm mainly posting this because i have a burning need to add another idea: propose to your sister that you trade drop-off kid dates sometimes! you live ten minutes away and it sounds like the kids are mostly playing by themselves; it doesn't sound like you've got four toddlers between you. if she's open to it, you'd each get some time ALONE-alone rather than headphones-alone, for errands or a walk or even going home in between. headphones-alone is the only option in many, many pandemic scenarios; alone-alone is priceless if it can be had, and it sounds like here maybe it could, and might diffuse the sibling tension.