Hi there.
I only have one child, a 4 year old girl and up until recently my husband could not discipline her effectively and he just got so wound up he went nuts with the yelling and screaming. I'd try to talk to him about how he was letting himself get out of control etc, and he'd just get really defensive and storm out. It also seemed like our little miss enjoyed pushing her daddies buttons too.
So I enrolled my hubby and myself in a one night parenting class called 1,2,3 Magic. There we learned about effectively disciplining children in a positive manner that actually allows them to be in control of their own actions. It's like a modified version of giving time outs.
We've been doing this for two weeks now and the difference is amazing. If she engages in any kind of behavior that's unacceptable in any way we say, "that's one". If she doesn't immediately stop we say, "that's two". If we get to three then she goes to her room for a time out that lasts 1 minute for every year old she is. So we set the egg timer in her room out of her reach for 4 minutes. We remind her that when it dings she can come out. It works beautifully! You don't have to get wound up, screaming or yelling, or trying to reason, it's awesome! I just thought that perhaps if you came up with a game plan that both you and your hubby could use, you all would be much happier. Then maybe hubby can find it easier to be more fair with everyone???
You're seven year old will understand 1,2,3 right away and your three year old will pick it up quickly within 10 days or so.
Here is a link with more info on 1,2,3 Magic.
http://cyberparent.com/spoiled/123magic.htm
Good luck!!
-H