WOW I have a lot of respect for those dogs after reading an autobiography of a dog handler out in Afghanistan. Please don't underestimate the effect their job has on them and the way it influences their behaviour. I would tread very carefully with your daughter and Teddy. I have 2 children, and a dog who is not completely comfortable around children he doesn't know. I know what it is like, but until you know him very well please don't leave him alone with any child. It has taken me a good few years to really understand how to best manage my dogs behaviour around children.
Sounds like you're approaching this in a sensitive and thoughtful way. Teddy sounds like a wonderful boy who has already endured a lot and who now deserves the love of his own family and a normal, calm life. Perhaps, if I guess right, your own background means you understand first-hand what Teddy has experienced in his working life...? I'm sure he's a comfort to all of you and vice versa.
