Aussie puppy bitting

Question
My cousin purchased 2 Aussie brother and sister puppies from a pet store.  We are very close and they come over quite often because we have a large fenced yard. We own two dogs a Pitbull mix and hound they are very social and friendly dogs.  My cousins Male puppy behaved very strangely from the start he would lay by my cousin while the other dogs played and would randomly start barking at our 2 year old son.  I had a border collie growing up and just assumed he was trying to herd my son and gave him a stern no and he would stop.  Recently the barking has escalated to nipping.  Unprovoked the dog bit a 7 year on the hand at my cousin's home and bit our son at our home.  Our son had just walked outside and was looking away from the dog when he started barking then bit our son on the side.  My husband grabbed the dog as it was happening I don't know if the dog would have done more damage.  Needless to say the dog is not longer invited to our house but my cousin is in denial because it didn't break skin either time.  I tried explain these things escalate and the puppy isn't even a year yet and early training is key.  He is neutered.  Any advice for explaining the need for early intervention?

Answer
IMMEDIATELY, your cousin should take those puppies to puppy class, in separate classes and with a positive trainer. No reputable breeder sells litter mates to an inexperienced pet owner, and he probably has puppy mill dogs to boot.  What that means is that they did not grow up in the litter in a home that gave them lots of activity and a good start on socialization.  Border Collies and Aussies can be taught not to herd kids (In a pup, that's all that was happening, and yes, it can escalate, but your husband did a lot of damage grabbing the dog, because that can really traumatize a pup to dislike men AND kids.  He probably should have simply told the child to "be a tree" because puppies will generally stop that behavior if there's no motion.  So, if that ever happens again with a *puppy* that's the easiest thing - just get the kid to stop all motion, and have the adult calmly go and remove the pup from the area.  Your husband can be excused for not knowing what to do, but your cousin should have done more research before acquiring these puppies.  The problem with Aussies versus Border Collies is that they are upright herders and work more with nose punches and harder grips than Border Collies, which, as you know, use more eye and stalking behavior.  Aussies' primary livestock to work are cattle, not sheep, hence the need for the toughness (although there are some pretty tough rams out there.)
Here are some resources for your cousin - and there is hope - I have a dog from extremely strong working lines, and here's a video of her after she was taught NOT to herd my horse:
http://www.youtube.com/watch?v=Di3cH2T6sHc
General Info About Border Collies: http://www.glenhighlandfarm.com/sbcr.htm
Online Lessons in Clicker Training: http://www.clickerlessons.com
After You Get Your Puppy by Ian Dunbar: http://www.amazon.com/After-You-Get-Your-Puppy/dp/1888047011 Can also get this by free download here: http://www.dogstardaily.com/free-downloads