Thanks again all for the replies.
I have an update...
The dog had become increasingly aggressive towards our children. We tried two different methods of correction. Move the dog away from me, his safe place, when he growled at the children when they came close. The second was to reward the dog with a special treat during controlled times when the children entered the room didn't say anything and then left. When they left the treats disappeared too. However, on Monday while I was at home working and the children were at the lake with the dog and their mother he attacked our youngest. Not completely, but he was about 5 feet away and then charged her and bit her hand hard and they recoiled. It did not break skin and he was on the lease. After that we became very very concerned. He exhibited the behavior again in front of me charging her with his head lowered. She has done nothing bad to the dog and we know this because he is always in our presence. So, on Wednesday we had a professional trainer come over. She is highly recommended in our city. She labeled the dog as "abnormal and aggressive". She said that we should not keep the dog. The breeder on Wednesday said we could bring him back and get a different puppy but not for 7 more weeks. Well, Thursday morning they changed their mind and said we are stuck with him. That is a entirely separate point that angers me. So, we put an ad in several online classifieds yesterday and we have had a lot of interest in the dog. However, yesterday I did not interact with the dog save a few moments and my Wife took control and worked with him and the kids. This was after I "attacked" him for going after our youngest again. I was upset and grabbed him by the neck harshly when he began growling lowering his head and chasing after our daughter. He yelped when I grabbed and I took him inside and put him in the kennel for about 10 minutes. When we took him out of the kennel, for the rest of the day I really did not interact with him. This is when my wife began working with him and the children intensively all day. She had them feed him awesome treats and petting him, staying very calm. By the end of the day he seemed different. He acts VERY different when I am around though. Like a completely different dog. He becomes aggressive almost immediately. However, after the incident when I grabbed him and put him in the kennel he was different. Immediately after that, in my presence he allowed the children to be around and didn't growl at them. By the end of the day and this morning he seems to have forgotten but it is not NEARLY as bad.
So, now we have NO idea what to do. Should we get rid of the dog per the recommendations by the trainer? Should we keep trying to work with him and give it a while and then see? If so, how long? Should we just plan to keep no matter what and work with him as much as possible?
Also, he seems like this with all kids, like he growled at one of the oldest's friends at the park.
(The children are hyper high pitched 5 and 8 year old girls.)
Thanks for any and all advice you may give! Also, we DO NOT Want to get rid of him. We all love him. But we CANNOT have a dog that we cannot trust around kids.