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I think it could be good for the 8-yr old, personally. Only-children tend to have a skewed sense of self, since they've never had to share their parent's love/attention with a sibling. Sounds like their both girls? Could be great for both of them, but the problem is you won't know until you get down the road a ways.
I'll join the others in saying "good on 'ya!" for even considering it. The niece must be a decent kid if you're considering it at all.
Best of luck with whatever direction the deliberation takes!
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We had a 15-year-old exchange student live with us for six weeks this summer and was so delightful we could have adopted her. (She had no need for this.) Fit in wonderfully with our 15- and 12-year-old daughters.
My cousin's 19-year-old son visited us for 48 hours and started rubbing me the wrong way after 15 minutes. He had grown up in a somewhat anarchic single-parent household so I desperately wanted to give him the benefit of the doubt, but after the first night I was looking forward to his departure and by the 36th hour everyone in the house was just about ready to kill him (including the delightful exchange student). After he left he visited my sister and restarted the whole process.
Here is what I would say about rules, and this has been true for me for many years with guests, live-in health/child care, and work employees: you can lay down a couple of basic ones governing the use of (in your case) household resources like cars, washing machines, and tolerance of other guests. But you cannot possibly write down every exigency. Many people, perhaps most, will have or quickly develop a sense for how to be good household citizens within those guidelines, and after a while you might not even care about the rules so much any more. But others will simply not have a sense for what good citizenship entails and will go off the rails on some of the billions of things that cannot be written down. Those people must be managed out of the house quickly because if things aren't OK at the early stages when they should be on their best behavior, it will NOT get better with time but it WILL get harder to get them out.
(My kid just reminded me of the relative: "Hey Dad, remember when XYZ visited and asked if he could bring his motorcycle into the living room for the night? The exchange student just texted me that she'll never forget the look Mom gave you! Ha ha ha ha ha!")