The Sario Rip two-in-one-place problem ISN'T about PHYSICAL MATTER, although it WOULD break the laws of conservation of matter...anyway, it is about CONSCIOUSNESS. The brain is forced to operate simultaneously in two places at once, and the brain CANNOT handle that. It eventually eliminates whatever is obstructing its own function, generally the other half of itself.
Rachel's consciousness was not one-in-two-places, it was one-cut-in-half-to-make-two-separates. Neither half was forced to work alongside the other, so both could exist. All the extra matter to make the second body probably came from one of her other morphs, floating out in Z-space, so it didn't break any laws of physics.
Plausible enough, in the universe of Animorphs.