As I do not live the the USA, I am not familiar with the home daycare laws, but if you are limited in any way to the number of children you can legally watch, then I would tell her that unfortunately, you can not provide that service at this time. I wouldn't allow her to drop the kids off at random times as they are going to be a lot of work as they will more than likely act out as they are not used to being there (at least the little one may). Also, if she has a hard time making her mind up, she may just use you as she needs you without ever having the intention of sending both children to you. I would personally just make a clean break.
Good luck with whatever you decided to do.