aggresiveness

Question
I have a 3 year old lab/doby mix.  He is a rescue that we adopted at 9 months.  I have 3 kids, 18yr, 16yr and 11.  He has been a super sweet dog since we got him.  easy to train.  eager to please.  heels well.  returns when we call him. always listens.  never had an accident in the house.  we also have a 8 lbs toy poodle who is the dominant dog.  a 6 year old cat that is probably 2nd in the pack.  they all get along great.  I am definately the pack leader and they all follow my lead.  However, he gets stressed and shakes and growls when around other dogs when we are on walks.  I can tell him to "leave it" and give him a correction and he will listen and not pull but I am sure if he was off lease he would take off after the other dog.  he has bitten my neighbor's puppy before.  Now today I noticed that when my cleaning lady came to the house she brought her 8 year old daughter who was super well behaved.  Immediately when they came in the house whopper was friendly to the adult but growled and put his hair up at the child.  I immediately told him no and put him in his crate.  I did not want to take a chance of him biting this child.  he is laying down in his crate and shaking.  whenever the child walks by he growls.  I correct him with "leave it" and he stops.  then he will put his head down and stop shaking.   When ever we have visitors he is super friendly and immediately finds his favorite toy and brings it to him.  Men, women, teenagers he likes them all. total strangers on the street he either ignores or is friendly.  he has done this behavior of being stressed, shaking and raising his hair at other dogs only or small children. During this the small poodle is acting fine.  barked when the people come in and then goes back to napping or sitting on couch.    I want to handle this correctly and send the right message to him.  Right now he is in his crate behind me and falling asleep.  I try to stay calm and let him know I am the one in charge.   Any help you can recommend would be appreciated as he is otherwise such a good dog and I would hate to see him bite a child and then branded a aggressive dog.

Answer
I do all I can to encourage rescue and help with problems with rescued dogs.  This sounds too serious for me to fix over the net.  An obedience class could be a good idea.  With somebody the right age in the family, 4-H dog training is a great idea.  Coul dbe a good project for the 11 yearold.   In my area, clubs form soon after the first of the year. Even many urban areas have 4-H. For info look in your phone book under government listings for extension or cooperative extension offices. Ask specifically about a dog or canine club. The dogs see all the people and dogs in the household as a pack with each having their own rank in the pack and a top dog. Life is much easier if the 2 legged pack members outrank the 4 legged ones. You can learn to play the role of top dog by reading some books or going to a good obedience class. A good obedience class or book is about you being top dog, not about rewarding standard commands a treat.