With some things, you have a 100% green light to exercise your parental authority, no ifs, ands or buts. This is one of those things. It's important to not be controlling and give your kids space/privacy as they explore their OWN sexuality. But when they start sexualizing each other it's time for you to lay down the law and put a stop to it ASAP. Do not feel guilty. You are 100% in the clear on this to get in there and stop it.