Hmmm this is a tough one...

At DS's CC they have been teaching them to say 'stop (with hand signal), I don't like it'. It sounds really simple, but it seems to be working when I see kids do it in the room. Obviously it takes awhile to sink in, but is a good start.

In you situation, I probably would be keeping a very close eye on what goes on. When he starts to do something that is overstepping the line I would go over to E and explain to her that she should say 'stop it, I don't like it'. You're almost killing two birds with one stone - you'll be empowering E to learn how to deal with this sort of stuff, but at the same time you will be intervening in a way that isn't telling the other child off iykwim.

Mind you, I think when the other child is so much older and has the bully traits you are talking about, you'll always have to keep a close eye on things... Even when E gets the hang of standing up for herself, there is nothing to say the other child is going to respect it.

HTH