I don't have any advice to add to the other posts but I wanted to tell you that I really feel for you. This must be about to drive you crazy. I know it would really bother me if my girls got that bad. I do have a similar situation but I've seen no blood(yet). I have two Chis also-both female. I got Daisy first as a tiny puppy(she's the small one), while I still had my RB, Killer(another female Chi). After I lost Killer, I adopted Delilah(larger one) from an elderly woman-she was two years old. I took Daisy with me to meet Delilah for the first time. Daisy loved Delilah and they got along great for awhile. Suddenly, Daisy seemed to try to take on the alpha dog role and began to bully Delilah for really no reason. They have had a couple of bad fights and one really bad one. I had to pull them apart. The only thing I can figure is that Daisy is in some pain occasionally with the luxated patella in her back leg. Perhaps she strikes out at Delilah because of it. On the other side of the coin, Delilah will sometimes take a dominate role over Daisy, as if she's paying her back. Delilah is such a sweetheart, I don't think she would ever have started instigating the fights if Daisy hadn't shown aggression first. So, in reality, like your Chis, my smallest one is the main player in instigation as well. It's very frustrating and it makes you feel helpless. I wish you the best and hope you find a solution very soon.
p.s. I would love to see pictures of them.