Hi S.,
This sounds like something a lot of moms go through: an imbalance in parenting styles between one's self and a close friend.
"When I know they are coming over, I also have feelings of dread/anxiety." This statement caught my eye. These are very severe emotions to experience. The fact that you are preparing for catastrophe by clearing out your daughter's more special toys also tells me that you are feeling pretty helpless in this situation.
One option would be to have the children stay entirely in your presence at your home. That is, your daughter's room is off limits to everyone and is not a place to play. That said, given your situation, I don't think this is going to be enough.
Another option is to choose to meet with she and the kids out in a public place, so that you don't have to worry about property damage at your home. And if things go awry, you can always 'have to be getting on home'.
You could also go a different direction, and get together with this friend in the evening/weekends for some child-free time. "Gee, it seems like we don't get out just the two of us anymore." is a friendly way to initiate it.
Or, you could be more honest and if questions come up on her end, you could start with "I feel like some of the kids aren't well-matched as playmates/ that your eldest is pretty bored at our house. Maybe we could come to your place?" or hatch another plan with her.
Ultimately, you have to decide what you want your children to witness when your friend's children are at your home. I personally don't have problems with disciplining children at my home, but that's also because I've been teaching youngsters for a long time and have tough skin in that regard. Still, I'm careful about which children I invite over for playtimes when visiting with their parents; some are easier and some, I just get together with their moms at other times. Those kids are good kids, but playtime at someone else's home (esp. when mama's attention is busy with her friend) is just more than what they can 'do' well at this time.
Also, Mama's On Call recently had a good post about holiday visitors:
http://mamasoncall.com/2010/12/my-house-my-rules/#comment...
I think this will give you some more tips to feel comfortable being a friendly but authoratative voice of reason during those more challenging times.
You sound like a good friend trying to be kind. At some point, though, your friend has to 'meet' you in this. If not, or if she chooses to be big-time offended, consider yourself relieved of those stressful visits for now. Maybe she'll come around....
H.