Wow! Quite a wealth of information from all of you, and I want to thank you for taking the time to post back to me.
I do not claim to be a dog expert, this is the first time we have owned dogs...., we've always had cats (!). We adopted the puppies from the county shelter (NOT from a breeder or somebody we knew) at 8 weeks of age, and we decided to get them both because we were under the impression that the two would keep each other company during our absences, and they could "grow up together". We also were interested in having them at the house for home protection - we live in a very rural area. We waited until we owned a house, and had some property so that they could have the room to run and play.
As it stands now, I am not sure WHAT we are going to do. I appreciate all your advice (and criticisms); it is very hard to give you the entire picture in a few short paragraphs.
As far as the behavior theraphy, honestly, we do not have the financial means to do that. I am sure that many of you may scoff at that excuse, but unfortunately, it is what it is. I love our dogs, but the financial line has to be drawn somewhere. We've read books, talked to the vet, etc, and done the best we can. Not everyone is a "professional", nor has the means to train like one.
My daughter has become afraid of Biscuit, mainly because she was playing with the dogs in the yard this last time when the fight started. Right now, we are leaning towards finding her another home. We don't feel right about keeping them separated and only having them together when they're supervised. As stated previously, expensive training isn't an option either. We love her very much, but in the big picture, we have to consider the other dog as well, and most importantly, the safety and wellbeing of the children.
Again, I want to thank you all for your time and advice. Have a good day!