Combine it, put your younger kid in a cargo bikes so she sees what good biking is about and learns from the older child.
I love this Dutch design bike and take my daughters everywhere in this bike, so they learn about rules and how to behave.
my daughter is 10, and as smart as she is...i don't allow her to ride on the street. ONLY street riding she gets to do is w/in our neighborhood. i live on a somewhat highly used road and she's relegated to sidewalks there as well. i'm not putting the life of my daughter in the hands of these a$$hole$ that i share the road with. i'm just not. you can say we're in more danger on sidewalks but we ride slow...
My seven y/o daughter rides middle position when the whole family is out for a ride, and we occasionally have ridden some pretty busy streets. Lots of chatter, lots of instruction. When it's just my daughter and I, the positioning varies.
On the MUP, which crosses more than a few regular streets, I give her the lead which allows her to practice approaching an intersection and/or stop sign as well as proper passing etiquette. She loves the "On your left!" routine.
On regular roads I take the lead and she follows my line unless we're forced to stop at a light. At that point I put her ahead of me, cueing her on where her attention should be at any given moment. On the green, she leads us through the intersection and holds the front until I can safely resume our regular positioning. This allows her to develop a sense of what's going on at intersections while I can clearly see her while making eyeballs at nearby drivers. Most important, I believe, is constant communication, and a thorough post-ride review of any challenging or unusual situations that arose.
We do have the advantage of riding in Portland, which for the most part is a very bike/pedestrian friendly city. We lived in Tucson AZ until early this year, and there is no way I'd have her on anything but residential streets down there. Everybody's little variables are different; working with them is the key.