I was meaning to post on this earlier. This situation mirrors my daughter's exactly. I don't like to ask but are you CERTAIN your daughter is not on marijuana 'weed'. My daughter is and it causes the exact symptoms you describe, short (very short) temper with the children, screaming at them in rage and hitting them. Her bad temper works off on the children who play up even more and start a viscous circle.
My daughter has been on 'weed' since she was 14 , she is 30 now! and it is getting worse. The modern 'skunk weed' is over 30 times as strong as the old stuff most of us tried in the 70 s and the effects are totally different. Instead of calming you down and 'chilling you out' it has the opposite effect and causes short temper, rage and anxiety in many people.
I hope I am wrong but as soon as I read your post it was striking how similar the situation was.