Since you "require" two controls -- I'd use two separate power packs (as I did when I was DC). That way, two operators (you and your daughter) could operate without getting in each other's way. Of course, the down side of this is that, since it's DC and you want to operate two trains simultaneously, someone must be switching block control switches (probably you) so one controller is not actually operating both trains.
While you mention that you're not using DCC for "simplicity" -- I found that DC was (is) far more complex for running multiple trains than DCC. I, too, have a small layout (also 5x10') and I originally ran it with 7 blocks and two DC power packs. Running one train was easy and fun -- the second train added a lot of complexity -- too much for me. When I was by myself, it wasn't too much trouble to keep track of which train was where and switch the controls appropriately -- but when someone else visited and distracted me, I found both trains in the same block quite often. It was especially annoying when a faster train found itself in the slower train's block...
You did mention "separate" tracks -- if you mean two isolated loops, then the switching problem is non-existent - Pheww!
[...and DCC will definately cost you more...but it adds the fun of sound, remotely controlled lights and accessories, etc.]
As far as power, probably even the power pack you have is enough to power an Athern, but if you ever plan on having lights in your passenger cars, or cabooses, you'll want some more capacity. I think the minimum would be 12 Volt-Amps (VA) (that's 12 Watts at 12 Volts, or 1 Amp) which is about what an old Athern engine draws (newer ones draw less). You'll never be sorry if you get a higher capacity pack - 18 VA or even higher. I had used the MRC, I believe, Model 1500, which has a 18 VA output and it served me well for several years before I switched to DCC (and I would NEVER go back). Swap meets are good places to get used transformers at cheap prices -- make sure you check that it, in fact, works; before you take it home.