After about two years of living together, Lancelot and Gandalf have decided to start marking on the carpeting. I lived with a cat for 11 years who did that, and absolutely nothing worked to solve the problem. I live in a small house (1,000 sq. feet). Not much running space. I have four kitty condos, and feed my cats Science Diet. My guess is that Gandalf was intimidated by Lancelot at some point, or else the oncoming summer heat started bothering him. Well, once one of them gets started, the other one follow suit. A total of five locations have been selected by the cats. I have torn up carpet, padding, tacking strips, used Dumb Cat and set out mouse traps in paper bags. Cats are intelligent, they just mark around the paper bags.
As a solution, I have chosen to tie chicken wire to my security bars which stretch the full length of my front porch, which faces east, has a nice hedge in front of it, and provides good shade. I placed the litter boxes on the porch, their food bowls, water bowls and plan to get two small doghouses and put a pad in them so they have a place to go to when it rains / storms. It's hot here in Phoenix. I feel sorry for them having to leave them on the porch, but
from my perspective, it is better than the alternative of having to surrender them to the "cat authorities." Lancelot and Gandalf's relationship swings from being friendly to adversarial -- just depends. Right now Lancelot is not too thrilled because he knows Gandalf started it, but Lancelot is doing the same thing -- my theory is "once they lose it, that's it." Either adjust and make them outdoor cats or give them up.
It sounds like you've got a plan. For anyone else reading this who might have similar issues and not know what to do, I'll add this:
If you wanted to keep them indoors, it sounds like a possible solution would be separation/isolation retraining inside the house. Of course, you could put one on the porch and one inside, and then switch them back and forth. When both are using the box correctly again, then you could put them together again inside and do a reintroduction.
Feliway has been known to help with both aggression and marking/litter box issues, as well as having a calming effect on anxious cats. And, of course, on a large area, you can use contact paper or double-sided tape on cardboard to keep the cats away from the marked spots and headed towards the litter box. When all else fails, there's always a pet psychologist.
Good luck with Lancelot and Gandalf.