Is RC4 +XOR secure for small data? I need to encrypt transmission between my device (with AVR processor) and base. I create packet data - it will be encrypted into string:

PacketData {
  int packetN;
  string data;
  CRC16 checksum;
  string nextKey;
}


As you can see, key will be changing after each packet.  

First, I tried to use XOR encryption, but I forgot that if attacker know plaintext, all encryption will be without sense.

Now, I have an idea - first, use RC4 on data with key, and XOR result with same key. I see bad side of this solution - key will be same for both operations, and I want key length ~64 bits. Handshake will be written on device (8 characters), and connection will be made when base sends encrypted packet with handshake. Also, data size will be usually between 4 and 32 bytes, sometimes more.

Is this encryption give me sufficient safety? After reading about RC4 in WPA, I see that is problem in WPA implementation. Maybe I should use (when connected) two keys, for RC4 and XOR, both sended in encrypted packet? 

Please, tell me what do you think about it. It must be light solution (because tiny processor) so I can't use AES. My solution is right?
Disclaimer: the only reason to go this way is if you have an 8 bit CPU. Otherwise, select AES.

Sending nextKey in the data packet is silly. What you want is key + iv. Look up the CipherSaber 2 variant of RC4. This covers the attack used on WEP just fine. Bear in mind though this wants a good RNG (probably hardware RNG) and 10 bytes of iv. Unless you can store the iv counter, there's no good way to reduce it. There are other possible attacks on RC4 though, the most worrying is the one that can be used against 1 billion messages to reveal the first 128 bytes of message. A plausible workaround is simply eating the first 256 bytes off the stream (don't bother sending just discard).

Your key length here won't be 64 bits though. That's too small. You need at least 128 bits.

We do have to keep in mind that RC4 and all its variants are weakening. There is simply no good explanation for the fact it is as strong as it is today. It really should not be. The next attack might doom it.

EDIT: Answer no longer good. A recently published attack against RC4 is no longer mitigated by the CS2 variant. I was not expecting this.