C.L.
I don't have a lot of advice, but I have two kids and two dogs so I feel your pain. After much consultation (maybe too much), I also had to have a small dog put down once for aggression (he bit children unprovoked and broke the skin). I would probably start with having the dog examined by your vet to make sure there isn't a physical problem going on and perhaps consult a trainer/dog behavior specialist. In the meantime, I would keep the dog separated from the children at all times unless you are within inches of the dog. It does sound like your dog was stressed that day by the party and some dogs susceptible to stress can be helped with medications such as Prozac. I suspect you may ultimately have to find him a new home for him and specify that he can't live with other children or pets. He might be the perfect dog for someone in that situation. Good luck.