Katrina,
I'm heartsick as I had a whole response typed which I somehow lost! I'll do my best to recreate my thinking. As I read through your thoughts, it came to mind that it takes time to find the right fit with HOD. One of the things that will definitely make a difference in finding the right fit will be knowing whether it is more important to combine your kiddos or whether it is more important to have the "perfect fit".

Either goal can be the primary goal, but it is important to know which one is first for you personally for this year, or you will be continually flip-flopping between options wondering which way is best.
If it is more important to combine, then you'll have to know that you will most likely not have a "perfect" fit in every area. If combining is first on your list, then I would lean toward combining your 7 and 9 year old in Bigger. To make this combination work well, I would do Bigger 4 days a week and leave each 5th day free for a family learning day.

In doing Bigger 4 days a week, you will not be able to start Preparing Hearts at the beginning of next year, however this plan would allow your 7 year old the needed time to grow up before heading into Preparing, would allow you to keep your 7 and 9 year old combined for the long haul, and would allow you to have a family learning day each and every Friday.

Keeping the 7 and 9 year old together in Bigger would also keep you on a pace that would allow you to eventually use the upper guides more closely to the way they were written, hopefully making sure your kiddos could do the "I", "S", and "T" boxes as written. The readings do get much longer and harder, so we don't want you to be reading aloud readings coded as "I" or it would take over your day! This plan would also allow you to begin your 5.5 year old in LHFHG whenever she is ready at her own pace.
If, on the other hand, it is more important to have each child have the "perfect fit", then you would instead consult the placement chart and place each child where he/she fits best on the first page mainly of the placement chart. Placing kiddos in the guide that seems to be their "perfect" fit can actually be less time-consuming than anticipated as there is much less tweaking and adapting. In reality, you can just open and teach. Remember the perfect fit also does not mean being challenged in every area but rather having 1/3 of the guide each day be a challenge, 1/3 be just right, and 1/3 be review or not difficult for the child to complete.

However, if it is your heart's desire to combine, then the perfect fit plan will never make you happy.
Wih this is mind, I'd spend some time pondering where your heart and your spirit really are to discover the best fit for your family. This may change from year to year, so I'd just ponder what you're feeling about this particular year, and then stick with what you decide for one complete guide (rather than a complete school year). After you've completed the guide, then assess again.

Completing a guide will make a big difference in your assessment of your children and your understanding of HOD. Each guide is part of a continuum, making the HOD path a journey that comes to fruition one bit a a time. The more guides you complete, the more of the incremental skill-building you'll see. I pray you'll find the fit you're seeking for your family.
This thread may also be of help to you as your question was to moms of many. Link:
viewtopic.php?f=6&t=9325
Blessings,
Carrie