I can certainly understand how the topic would be very upsetting.
Your daughter is correct in that she will be able to chose whom she would like to live with (and even at the age she is at, they will take her desires into consideration) This also means that she can chose differently later on. Working with teenagers everyday has given me the unique perspective into understanding that they change their minds every 5 mins. Instead of trying to win her over, provide consistency. It is the only thing you can do.
I would imagine your son would not want to go from having his own space to sharing a room. It would be difficult at best. Not every family blends as well as the Brady Bunch.
Is it fair? No...but it is the way life is.
Your ex has been with her new husband for 7 years (according to your tag line) That is an awfully long time for your children to become attached to him (as they should) and treat him as a father-type figure (as they would)
They were young when she left and if he was there the whole time, a bond would naturally (and thankfully) develop. I think it is great that he comes to their sporting events. He is a part of their lives.
Why would this be straining your relationship with your fiance?
