E.S.
Well I'm going to be the odd one out and say keep the dog! It probably is traumatized from being put in the pound in the firstplace. I think what you need to do though is get a doll that is approximately the same size as your toddler. Then dress the doll in clothes that your child has worn latly. But if the behavior doesn't start to change over time or esculates to bitting then that is when I would find it a good home with no kids or make it an outside only dog.
use the doll to calm the dogs fears. Honestly people underestimate how many emotions animals truly do have. take the doll up to the dog and make the doll reach for the dog and if the dog growls tell the dog no be nice. it takes a little time but it should work. yes an older dog can learn new tricks it just takes a little longer for them.
Just so you know I did this with our puppies when they were around 4 months or so before my daughter was born. told them baby be nice and gently. we had a doll dressed up in actually baby clothes with lotion and powder in a real diaper. it worked very well. now a stranger couldn't get near her if they tried.