Can you get a second opinion, GoldenAngel? Maybe at a veterinary teaching hospital? It may give you no new options, but even that may help you in your decision. As for the two nights' stay, it might not be as traumatic for him as you fear. Procedures that require anesthetic leave the dog a bit out of it and more lethargic than usual for a day or two. Sometimes I think our dogs don't even remember having been gone.
I'm so sorry you're going through this.
I wish you all the best with Teddy and I hope you'll keep us posted on his progress.