Oh, goodness...I feel your pain! My son was born 12/13. His big sister turned two in September. I am trying to let her be a big sister, while still keeping baby safe! What I've decided to do is to make a "line" in my mind - as long as she doesn't cross it, she's fine. She can cuddle him, get too close, talk too loud while he's asleep - that's all fine. So far, baby has learned to sleep through just about anything she can throw at him. She's two - she won't understand, or remember, the need to be quiet!
What I WON'T tolerate is hitting, muffling, covering his face...and so far, we're doing pretty good. Your big boy covering baby's mouth would be where I would draw the line with my daughter, probably resulting in a time out or some other punishment that she would remember.
Good luck? I think babies are remarkably resilient, but there is a line that big brothers and sisters should learn not to cross!