I agree with the others. You need to seek help with them.
Also be consistent when you punish the kids after their bad actions. They need to see that it is wrong and that there is a direct correlation between their actions and your punishments.
People say they're too young to be punished or learn. That is not true. The meanness and violence they're practicing is a "learn" thing, is it not???? They learned bad from others, then they can learn to be good too. After the punishment, hug them and talk to them about how they feel and about how it makes the animals feel when they hurt them.
If you don't punish them (punishment that's appropriate for their age) they will grow up to be very bad people who will cause suffering to others. Torture always happen to animals first, and then to humans when they are older.
They need therapy. They've witnessed a lot of violence. Ignore this and you will create to psychopaths, because they are already losing their empathy.
They are still really too young to understand about being mean. They need to be taught how to be nice. Using dolls is a good starting place. But using (probably the dog) the pet on your lap. Show the children how to pet the animals. Use words like gentile and soft. And repeat, repeat, repeat. This is not something they will learn overnight.
Did their parents have pets? If so you will have to break old habits which will take even longer.
And yes, until, they learn how to be nice to the animals, you will need to protect them. Although, I am pretty sure the animals will also figure this out.
I feel for you. I have grandchildren of this age and we really have to watch them all the time. Basically, you cannot let them have the run of the house. Childproofing a house also means keeping them out of certain areas with gates etc.