You could use bookcases, but rather than put them back to back, which would take up a lot of floor space, put them side by side, but facing in opposite directions, so that the kids each have shelves to use. Using a fence panel sounds nice, too; you could add a roller shade to each side to fill the gap between the top of it and the ceiling, as well.
Plywood comes in 4-foot by 8-foot sheets, and the big-box lumber stores usually offer one cut for free (and a nominal charge for additional cuts).
If you were able to get the wood panels cut to ceiling height, you could probably find a wood molding that would help keep it from shifting (like a "U" channel) with only a few screws into the ceiling and floor, if it is carpeted. (I am sure the store could recommned the best hardware to anchor it--with earthquake codes, there is probably some nifty method that we don't even know about back east!) Combine that with putting some furniture against it, and it should be quite safe.
Your son could paint his side one color, your daughter could choose her own, as well. Maybe a mural if they're artistic. You could add a curtain from the divider to the wall for each kid, as well, for privacy. It would not need to go to the ceiling; so a shower bar would probably suffice, with sheets or shower curtains. (And the shower bar would add additional stability.)
Incedentally, you might want to ask your landlord (if you are on good terms) before you remove it, when it comes time to move. He might like the option of offering the room as a divided kids' bedroom!