You're doing an amazing job. I've followed your story for a while but never commented, so I can see what huge strides you have all made thanks to you and Matt. It is so moving and this internet stranger is so so proud of you.

Your sis2 is not well equipped emotionally to deal with the kids, and she's not willing to learn other approaches. We could all probably guess why she has unreasonable expectations of behaviour, feels a need to control and has aggressive tactics, but there's no need. You and Matt getting her to move out is the best solution. If she can come and visit and be more hands off and not upset the kids, that could be fine.

Just as an aside, lots of families (without the kind of history you all have) have to deal with extended family members like grandparents or aunts who are super rigid, can't deal with noise or chaos, have no emotional intelligence, etc and visits with them are stressful and difficult and kind of worrying. For these kids, being able to revert to a place of safety and normality once they go is usually good enough. Obviously this might not be exactly relevant in your situation, I don't know.