I don't know if this is recommended practice

but this is what I--an imperfect parent--do:
I tell my older child: "I saw that. That [be specific: bopping, provoking, bragging, insulting] anyone is not acceptable. Take a moment to think about how you want to be treated, and how you would feel if someone did that to you. Then, tell me what you're going to do to make that right [apologize]. The next time I see that happen, there will be a serious consequence [put a toy on vacation, whatever]."
Remind the child that if I see someone behaving meanly toward him, I'd intervene, too.
Intervene if the youngest is provoking: don't always assume that the little one is 100% innocent, and demonstrate to the oldest that I'm on his side, too.
Encourage problem-solving when the older child is ready for that. Meanwhile, I'm the little's primary protector.
And praise like hell when they're being good.