All perfect praise be to Allaah, The Lord of the worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
The worshipers in a mosque should keenly strive to be unified in their actions and opinions and calmly discuss the matter in order to decide on the best plan of action that benefits their religion and fosters their unity. The people of the village should have renovated and expanded the old mosque if it had become too small to accommodate all the worshipers. It is impermissible to build a new mosque next to another (with the intention of causing harm) so that people would abandon the first mosque if it is still usable and people can perform the prayers therein. This is because it is impermissible to abandon the old mosque by using the new one instead. The prohibition is even more emphasized if the new mosque is built next to the old one with the intention of disuniting people or driving them to abandon the old mosque so that it be left empty and deserted.
Imaam Al-Qurtubi wrote, "It is impermissible to demolish, sell, or shut down a mosque, even if the neighborhood is in ruins. Building [new] mosques should not be forbidden unless they are built with the intention of causing disunity and dispute by building a mosque next to another one or near it and intending by that to disunite the worshipers who attend the old mosque so that it becomes empty and deserted. The second mosque, in this case, must be demolished and its construction should be forbidden..." [Tafseer Al-Qurtubi]
He also said, "Our scholars said: it is impermissible to build a mosque next to another, and the second should be demolished and its construction forbidden so that the worshipers of the first mosque would not be driven to abandon it and pray in the new one instead, leaving the first mosque empty and deserted as a result, unless the neighborhood is large and one mosque is not enough for its residents. If this is the case, then it is allowed to build the second mosque..."
Hence, if you can connect the two mosques so that they become one, then that is better. If you make the old mosque a prayer room for women as an expansion to the mosque, then there is no harm on you in doing that. If the first mosque is still suitable for holding the congregational prayers but is too small, then there is no harm in building the new mosque as long as the intention is to accommodate the worshipers who find no room in the old one and not to cause harm and disunity. However, it is better to expand the old mosque to accommodate all the worshipers together in one mosque. The Hanbali scholar Ibn Muflih wrote, "Saalih asked his father (Imaam Ahmad), 'What should the distance between two mosques be if they should be built next to one another?' He replied, 'It is impermissible to build a mosque next to another with the intention of causing harm. If the first mosque is small and cannot accommodate the increasing number of worshipers, then there is no harm in building a new mosque, even if the distance between the two is short...'" [Al-Furoo']
As for your prayer in the new mosque, it is valid in all cases. Mataalib Uli An-Nuha fee Sharh Ghaayat Al-Muntaha reads, "A prayer performed in a mosque that is built with the intention of causing harm is valid, though disliked, as long as the land on which it is built has not been usurped." If this is the ruling on the prayer in a mosque built with the intention of causing harm, then the prayer in other mosques is valid with greater reason.
Allaah knows best.