This has been a real issue for us. We have three girls (5 1/2, 3 1/2, 2) and they each had their own sleeping issues. The oldest would go to sleep fine in a room with the overhead light off, and door open. The middle child had to have all the lights on and the door open. The youngest (who is in a toddler bed cause she learned to hop out of the crib) had to have the door closed and lights off. We had the oldest sleeping in her toddler bed in a corner of the playroom, the youngest in the bedroom, and the middle one would go to sleep on our bed then we would move her to her own bed in the room with the youngest when we went to bed (we also had to wake her up a bit at that time because of night terrors, but that's a whole other issue;). Now we live in a large house with two actual bedrooms for the three girls. Finally we have them pretty well worked out. For the moment. The older two share one room and the youngest has her own room. They would not go to sleep for hours at a time cause they are real girls and liked to sit up and talk and play, so I now sit in a rocking chair in there for probably an hour every night now reading to them until the middle one falls asleep. The youngest prefers to have her door open now, but if she is in a room with anyone else she gets too excited to go to sleep.
Basically, none of our girls have ever been good sleepers (for a variety of reasons) and we have had to change techniques several times to keep something working. For us, an uncomplicated bedtime was most important, so we went for the separate-to-go-to-sleep method. Decide what your priority is. If you can get the baby used to the sound of you reading while she sleeps, this could be a great time for all of you. If it ends up being a headache every night...keep them apart until they're all asleep!
Sorry, that took too long to write, but just work with things until you find something that works for your family; even if it is a little unconventional.