Two Games on one IPAD 3

Yes

but

you need two different FB accounts

and you should not connect any of the games to Game Center

It is the same game but two different accounts, you cannot download the same game/app twice to keep them separate. 

You need to login and out of FB for every time you want to change town, so it is a big fuss

They have to toggle 2 different accounts and that can get confusing

Not sure how old your children are or where you are but here FreePlay is a +12 years (it differs on which country you live)

At 12 years old, they should be able to toggle the FB logins themselves, and depending on how well they get along, stay out of the each other's towns

I would still recommend two different devices, mainly because of security concerns.

All accounts (FB, Google, Apple, EA etc) are classified as personal and are not to be shared as that breaches the terms of service, meaning if anyone else but the owner of the account have access to it, the liability is all yours and they have no obligation to help you whatsoever if let's say Sibling 2 spends all premium currency and deletes Sibling A's entire town - I have not seen that scenario but I have seen toddlers deleting a parents town and spend all their premium currency on "cute (but useless) stuff"

TL;DR yes it is possible but it is a hassle and unsafe, better to have two devices