It is incredibly hard to be a easy child younger sibling of a difficult child.
I would not give up on therapy so fast. Yes, it is miserable right now. It will not magically get better. Your kids need you to set boundaries for their fighting, to teach them to deal with anger, rage and all of their emotions in a healthy way and NOT the way they are doing it right now.
The kids also MUST learn how to fight. Yes, that does sound awful, but I am not talking about punching or hitting. I am talking about the rules for healthy fighting.
You need to learn, practice and teach healthy fighting skills. Fighting/disagreeing is part of life and as parents we must prepare our kids for this. it is such an essential and common method/form/type of communication but we spend so very little time actually explaining the rules and WHY they are important. Some people get this the way they get other social cues, but many people never learn these rules.
I strongly recommend doing some research on sibling abuse. Yes, kids can and do abuse each other. It isn't a topic people discuss openly, but it is a real problem for many people. There are some great books on amazon about it or you might find them at the library.
I would monitor the fights to the point that f they got quiet or certain tones of voice (ones that show one of them is close to losing it or hurting the other or being hurt). If someone is hurt, then you need to separate them. If this is over a household rule, then you are the boss and final word. Problems between then? if they get too upset, then consider mediating.
One thing that my mom did wth every kid on our street was to make us do more than just mumble
"sorry" and shake hands. At our house if you got into a fight or argument, all parties had to sit quietly n different areas until we were all calm. Once we were sitting calmly, my mom would tell us that we would each get a turn to tell our side, but we had to sit and listen with-o commenting or arguing while the other kids were talking. We each said our piece and usually we all saw how silly we were and we made up. During our turn we could not raise our voice, call other people names, say nasty things to each other, or use the words 'always' and 'never'. Those words have no place in a fight because neither one is true. To her enormous credit, my mother did not take sides, not even when gfgbro was the one causing the problem. This didn't make the kids not want to spend time at our house and for a lot of us this was the reason why. Sure we had popular outside things to do/play with, but those were never the biggest draw. We all were pretty sure that my mom wouldn't let things disintegrate into big fights.
Here are some websites with good rules for fighting:
This article not only has advice to help parents handle fights, but if you scroll down it has some questions to see if you jump in to mediate every time they argue. The article explains why it is so important for kids to learn to fight in a healthy way and it has tips to help prevent or detour fights between siblings:
http://www.essortment.com/sibling-relationships-fighting-advice-parents-36899.html
This is an eHow page with some pretty ambitious sounding advice to teach conflict resolution to kids. I do think it might be helpful, but I don't know that all teens could handle it. I cannot remember your kids' ages so check it out and if it helps, great.
http://www.ehow.com/how_4827949_teach-conflict-resolution-teens.html
This site has 37 rules for fighting fair and most can be applied to parent/child or child/child relationships very easily. I would find a way to moderate #12 on the Do list from "Go Forth as Equals" to something more age appropriate for each child. I would also not enforce #17 on the Do list because it is "Hold Hands" while you are fighting. With 2 children it may be better to have them sit a few feet apart, but you know your child and what is/isn't right for them. (Mommy Instinct trumps doctor and super duper triple trumps an internet list!)
The Don't list has 2 of rule #14 and I would change the first one, "No Talk of Divorce". Clearly kids cannot divorce their parents, but every situation is unique. So follow your instincts on that rule, in my opinion.
http://happylists.wordpress.com/2008/08/01/37-rules-to-fighting-fair/
I hope this is helpful. Fighting kids sure can take a weed whacker to your very last nerve, can't they?