I have BTDT...
Two years ago my 7.5 year old DD finished pre-team and began competing the old level 4. Meanwhile her 4.5 year old sister was invited to pre-team. I thought they were crazy, as my younger one had no skills, but we gave it a shot. Older DD did well at L4 and my younger DD blossomed on the pre-team. I figured that older DD would move to L5 and that my little one would do a second year of preteam due to age...
When it came time for move-ups, my older DD was missing her kip, so she was held back for a second year of L4. The coaches decided to move her younger sister up to L4, as she had all the skills except for one, and would turn 6 right before the first meet. So I had two L4s, three years apart in age.
They never competed directly against one another because of age, but it was much easier for my younger one to place higher at the meets, as her age group tended to be very small and lower scoring. (A low to mid 8 would land her on the podium, whereas it took a mid to high 9 for the older one to place well.)
Luckily we have a very understanding coach who got that my older DD felt frustrated and bored. She let my older DD uptrain with the L5 group at most practices, which helped a lot. The kip FINALLY came, as well as consistency with the other skills.
Well, a month ago the L4 group finished their season and began uptraining. Little sister is picking up the skills left and right. Things that took older DD nearly a year to learn are taking mere weeks for my younger one. Jealousy is an issue sometimes, but for the most part they are supportive of one another.
I think they will both compete the "new" level 4 next year unless my older one has a skill epiphany over the summer. My DDs are very different personality-wise, and I feel that one day in the near future my younger one will pass her older sister, mostly due to personality differences. (Younger: aggressive, fearless, and very very focused. Older: a bit timid/cautious, and fun-loving.)
The best I can do is be encouraging to both of them and try not to compare them to one another. (And silently rejoice that they will have the same practice schedule and meet travel schedule for another year.)
Good luck with your decision - there are definitely both positives and negatives with having siblings together.