I wish I had a little more information. You didn’t share how it is that you have custody of your sister’s kids or what services have been provided for you both. It seems that you are trying to do a great deal without the information or support you need to do it well.
If you haven’t already, please contact the Department of Disability Services (http://www.dds.ca.gov/). Your sister needs to be evaluated for whether she qualifies as a person with intellectual disability and whether she is eligible to receive a variety of supports.
Having had a number of traumatic experiences, your sister may need some intensive therapy as well. She won’t be able to parent as you (and she) would like her to until she has supports (other than you) and treatment geared to helping her reach her goals. Even with treatment, it may not be possible for her to be a full time parent. In that case, treatment would be focused on helping her make peace with that fact and with determining the healthiest way to be part of her children’s lives.
Meanwhile, it sounds to me like you are ambivalent about being the kids’ primary parent. At 30 years old, it probably isn’t what you had in mind for this stage of your own life. It’s good of you to step up, but you may need more help than you currently have to parent well and without resentment.
The fact that the kids are “terrorizing your home” suggests that they are upset as well. For that reason, I suggest you get an appointment with a family therapist who can help you navigate what resources are available to all of you. The preschool teacher may be able to make a referral for you.
You don’t have to go it alone. There really are resources available in your state to help you.
I wish you well.