We put our DD in with DS when she got too big for the bassinette and went into the cot in DS's room and he went into a single bed. It worked really well for us and we had no dramas at all. I think if Xander is keen to have bubs in there with him, then it should work out OK. The one worry most people have is the baby waking the older child up, and vise versa, but we didn't have a problem with that either - I would just see to them quickly so that they didn't disturb the other one. You can always trial it and if it doesn't work out, then you do have the other room to use.

As for putting them to bed at night, I always put DS to bed first and then DD after her last feed at night.