Hi again, Clare, and thanks for your additional information.
From your description, it does sound like he's treating the furry toys as prey and 'play hunting', which he would do (and may have done at the farm before you got him) instinctively. Some cats also must have 'loveys', which are like favorite, security objects that they like to carry around and feel very protective of. As you may know, sometimes human babies/toddlers, also have loveys, like a security blanket (or piece thereof), special stuffed toy, pacifier, etc. which they always carry around and it fills a security need.
The fact that your boy recently was neutered and his sister is not yet spayed may have something to do with his aggressive behavior towards her, as some testosterone remains in the male cats system for a while, after neutering.
Since you associate this first strong, aggressive reaction with catnip, I'm glad you removed catnip toys from his collection. I don't see any problem with him trying to be protective of the furry toy(s), as long as he is not lashing out and injuring his sister or any humans in the household. Try to wean him off the furry toy and buy some 'material' (plain cotton) toys and/or cat safe plastic toys like open balls with bells (make sure the bells can't come out), etc.
Also, supply your kittens with scratching posts and pads (scratching pads are made of corrugated cardboard and sit on the floor-you can find them at stores like Petsmart, etc.), a kitty condo, 'crunchy' tunnel, etc., all toys and objects to keep him busy; as you can see, kittens are a bundle of energy. Diverting his attention away from the furry toys by substituting other toys and playthings should help the situation.
Also, try a cat appeasing pheromone called feliway. This comes in a spray and plug in diffuser. The diffuser resembles a plug in air freshener, but has no scent to humans. It can help calm stressed or anxious cats. They sell it in Petsmart and online: www.catfaeries.com/feliway.html
Discuss this with your vet when you bring your girl in to be spayed.
Good luck with your two cuties!