It does worry me that she kept the plastic there after her sister showed clear signs of distress and this would be something that would worry me as a parent. I don't think it's a problem to have things like bubble wrap for kids to play with (I used to play with it too!) but only if your kids know the dangers of plastic or you are present in the room. Obviously in this case they were unaware that she even had it.

I wouldn't leave her alone with the baby if jealousy is causing her to harm sister. I also wouldn't leave her alone with your kids either. But as I said, I don't think it's cause enough for you not to move. She will grow out of the jealousy thing - my brother used to hurt me all the time when I was a baby and by the time I was three and could play we were best friends. I think it comes down to heavy supervision and lots of lessons about playing nice and being kind.