biting for no apparent reason

Question
I was playing ball with my dogs, in our back yard, and our aussie mix, suddenly, out of the blue, bite a child that was visiting our youngest son. The child was doing nothing wrong, he was only in the yard for a few seconds, with my son and myself, he was standing with his hands in his pocket, just looking at the dogs and our aussie became very aggressive, grabbed a hold of the child's leg and bit him.  This dog has been a very patient and loving dog with my children, with our 6 month old puppy and our cats.  We adopted him from the pound in Del Norte county.  We had to quarenteen him at the pound for 10 days.  So the dog is not currently with us.  Should I be concerned for my children? Can I retrain the dog so that he does not bite again, or am I going have to keep a muzzle on him at all times?  My husband and I are not quite sure we want the dog back, but the dog has bonded with our youngest son. What should I do? Do I need to be concerned that he will turn on my youngest? Right now the new rule is, Nobody in the back yard but family. He will be getting nuetered after his quarenteen , will that make a difference in his temperment?

Answer
Aussies can be "reserved" with strangers, and can act if they think someone is an "intruder" or poses a threat (just making eye contact is sometimes perceived by dogs as threatening).  These are dogs that have "strong herding and guarding instinct" according to the breed standard, and if not exceptionally well socialized as young puppies and on into adolescence and adulthood (and even if they are) can become very protective of family and unwilling to accept strangers into the home or yard, or car.  I agree that your best course of action is to limit family only to the yard when the dog is out.  You may still want to acclimate him to a muzzle (after all, the muzzled dog is the safest dog in the bunch).  There's an article at www.morrco.com on how to do that.
Neutering often helps when dogs are aggressive with other dogs, but not as much with people-directed aggression, although I would still neuter.  
If you can find a really good *positive* trainer who has experience with herding breeds (IPDTA, APDT), or a behaviorist (IAABC), do think about taking classes, and learning how to manage your dog to the best of your ability.  If you cannot keep him, he will probably be put to sleep, since he has a bite history now, so it's important for you to get an honest and accurate assessment of him from a professional so that you don't make a hasty decision.  Some dogs, properly managed, never commit an aggressive act against their families, and live long happy lives, just not interacting with the public.  It's up to you how much you wish to manage the dog, and how much risk you can accept.