Dog Aggression

Has anyone ever had to deal with aggression in their multi-dog household? My Sheltie, Lady, has food aggression. We have pretty much nipped that in the bud by only giving treats, rawhides, etc while the dogs are in their kennels. When the dogs are fed, we stick pretty close to make sure Lady doesn't race over to Zoe's bowl and try to eat her food. Fortunately, Zoe eats much faster than Lady, so as long as we feed Zoe first, we don't have any issues.
Now, Zoe is starting to show aggression with her toys. In recent weeks, the dogs have gotten into two fights over toys. Zoe is the one initiating these fights and when I try to break them up, she continues to try to attack Lady. In the last fight, Lady had a little blood in her fur. I couldn't find any wounds on either dogs, so I'm not sure where the blood came from. In any case, I'm particularly concerned because we have a 2 year daughter and a new baby due in July. The dogs have not shown any aggression toward my daughter (they have been known to snatch food every once in a while though.) I don't expect they will be aggressive with the new baby; however, I'm afraid one of my children will get in the mix of one of these fights and end up hurt.
I don't want to overreact and give up one of our dogs; however, I must be protective of my children as well. Does anyone have any advice?