Our daughter just turned 2, and we took the side off her crib to make it a 'toddler bed' when she was about 21 months old. We saw her get one heel hooked over the rail, but never saw her get any farther than that. The reason we did it at 21 months was we were visiting friends for a week and she was taking most of her naps on a regular bed, and was sleeping at night either in a pack and play, or in a peapod tent, so her routine was totally different for that week. When we got back, we figured we might as well take the plunge to the toddler bed rather than have her get used to the crib again.
We made a big deal about it being a bed, not a crib, and we practiced putting her down for a nap (we also introduced a small pillow and blanket to cover up with at the same time), so she would just grin and snuggle up with her doll. It went really well at first. Then about three days later she learned how to open doors. So she would wake up in the night, think it was maybe morning, and come into our bedroom. We could generally turn her back around and she'd just climb back in bed and go to sleep, but the door opening thing wasn't something we had bargained for when we made the decision to convert to the toddler bed. :P
It's been a little over three months, and we've had some good patches and some bad patches. It was the worst when she had a bad cold and was teething at the same time. She'd resist going down for naps or bedtime, and just exit her room if we didn't stay in there with her. It has helped to be really consistent with the routine, and to tell her ahead of time that I'm going to leave the room, but I'll be close by, I can hear you, I'll come and tell you when nap time is over, etc. It also helped to learn about wakeful windows (the average length of time a baby/toddler can generally be awake between naps) and do our utmost to get her into bed and through the bedtime routine *before* her body needs sleep. Once she's overtired and the adrenaline kicks in, it's like trying to keep an agitated squirrel in bed. We're also just starting to use an "Ok to wake" clock to help her know when she wakes up in the night that nighttime is not over yet, and hopefully she'll just stay in bed and go back to sleep. *Fingers crossed*
One thing you might have going for you if you decide to move the younger one into the same room as the older one, is that they would have the other's company. Especially when our daughter is trying to fall asleep, it seems like the thing she most wants is for someone to be close.
Good luck!