Though I'm not a parent myself, I get that this must be incredibly tough to deal with... I know from my own experience that the psychology surrounding something like chronic illness is often harder to handle than the illness itself. And bullies... omg, bullies... *sighhhh*
I'm sure you're already educating and reassuring your sons and making up for the negative and scary things they've heard from others, so all I can really say is keep that up. Show everything in as positiver a light as possible. When you're treating your daughters diabetes, talk about how great it is that insulin and diligence will give her live long and happily. If she uses the pump or the pens, talk about how cool that technology is. No one wants to get diabetes, but if they're told repeatedly that it's not only not a death sentence, but also surrounded by some cool stuff (I impressed people with my cool insulin pens that were soooo easy, and I feel kind of like my pump is an exclusive high tech gadget that not everyone can have!), it might make things seem like a lighter topic and a little bit less scary in general.
And come to think of it... You might want to ask them specifically what has them scared and address each thing. Is it that getting D meant DKA and a trip to the ER and ICU for your daughter? Well, you now know the warning signs of D and it's much more likely that he'll find out at the doctor's office before it ever gets really bad. Is it that they keep hearing their sister will die young or go blind? Tell them about Richard, who is not only long-lived and healthy but can totally rock the online message boards better than some people half his age! :)
Sorry to be sort of rambling... They're just things that come to mind.