Of course you can make it work!
I can see islands/peninsulas like you have in kitchens. They could be multi-purpose for sit up areas, perhaps like an old partner's desk where you sit from one side for the office and kids sit from the other side for their colouring, etc. And when the other isn't there, there's extra space! Also, cabinets that will be multi-purpose to be used for toy storage now ... and stash/sewing when the kids no longer use the room!
It'd be important for all using the space to tidy up after themselves and develop a healthy respect for the other's space (ie not invade)!! Take time to list your dream list for the perfect room. Then start planning it out on graph paper, and see what you can work in of things you have already to keep the costs minimal.