M.P.
I can't tell you what to do in this situation but my alarm went off when you said the kids were "roughhousing" with the dog. Could that have been what provoked it and was it a "bite" in response to being too roughhoused or a "playbite" (like some dogs do when playing with other dogs, mouthing around their necks, backs, etc.)? We've tried to teach our kids that the dog is just that: a dog, and should not be teased or generally pushed around. They are only 4 right now, but they know if they want to play with the dog, that involves throwing a ball or toy for the dog, not physically being on him or chasing him, etc. We have a 9 year old boxer who is a complete love, and has never given me concern, but as he ages, I'm trying to watch for signs of getting less "tolerant" so we also have also taught them to never wake him while he's sleeping or to ever touch him or his food while he's eating (even though since we've had him, I myself have been able to put my hand in his bowl while he's eating and he's never been aggressive but that could change as he ages...) I guess I'm just wondering, if you've never had an issue with your dog before, could it have been the roughhousing situation? I don't think we can expect a dog to just turn off his instinct because we have kids around. It's our responsibility to teach the kids how to act with them. In fact, when we have our kids' friends over, many times I keep our dog crated since some of the kids have a fear of dogs and some other kids do not have them at home and do not know how to treat him so I keep them separated just in case.
I know I'd be so upset, as it sounds you are, and wondering what to do here. If you are truly worried your dog will bite again, perhaps it's best to place with a responsible dog rescue that will take the time to evaluate the dog in a foster home situation and place with the right family. I'd also consult your vet before you do anything.
I hope you can find a solution that works right for you and your family.