#1. Absolutely no rescues. I know some will disagree with me on this, but when we're talking about very young children and large breeds, you need to know where that dog came from, its past history, etc. Were it you & your wife, and seeing as you're "dog people", then it really wouldn't matter. However I can't honestly recommend a large-breed dog of undeterminable breeding stock & past history around very young children.
#2. As a piggy-back on #1, go with a reputable breeder known for the qualities you're looking for. This won't be cheap, but the animal you gain has a much better chance of meeting the standards you require.
#3. A dog is
not a security system in and of itself. Contrary to popular belief, a dog is not a be-all/end-all answer to a security issue. Even police/military K-9's, bred and trained to take down a man, will occasionally have issues depending on external factors (size of the man, drugs/alcohol, weapons, etc). Also, a dog obviously won't stop a 12 gauge.
Rather, I present to you that a dog is
part of your security system.
As I've told others for years, your home security system should have 4 very basic elements:
1. A monitored alarm system (Brinks, etc)
2. A dog
3. A cell phone
4. A gun
The alarm is there for obvious reasons; to provide 24/7 coverage to your home. However, it doesn't work if it's not activated when the home is either vacant or when you're asleep. Get one. Use it.
The dog is there to provide companionship and brighten your lives. In the security role, it has
ONE job - to sound the alarm in case of emergency or disorder (Air Force SP's should find that phrase familiar

). Their job is to let you know to secure the family, dial 911, and arm yourself. Nearly any dog will fill this role. Even your professional house-breakers have said that any home with a dog - any dog, not just Cujo - is immediately passed up. The dog isn't worth the trouble. You don't necessarily need the dog to engage the intruders. (I'll touch more on this in a bit)
The cell phone is for the event that a storm or other situation kills your power or disrupts your hard-line phone service. Most often the result of violent storms, not Splinter Cell thieves. Even a de-activated cell phone can still dial 911.
Lastly, have a firearm - hell, have several - and have the adults in the family trained in their use.
Your dog is part of your pack, and will look to you for leadership and protection. You have to be able to assist. You are the alpha!
#4. Many breeds have been abused and virtually destroyed in North America for various reasons, leaving them an unacceptable choice for small children. There's really two main reasons:
An astronomical rise in hazardous breeding, resulting in mentally unstable animals. This is common with the Pitt Bull, Golden Retriever, Doberman, and Dalmation, just to name a few. While many may be familiar with and understand the reasons for mentioning the Pitt Bull and Doberman, both the Dalmation and Golden Retriever have seen a resurgance in popularity in the past decade due to various reasons. Irresponsible breeders have attempted to match the demand, resulting in numerous behavioral issues.
Breeding for aesthetic appearances rather than the health of the dog, resulting in severe health issues. This is common with the German Shepherd and Golden Retriever. Hip displaysia is very common in American-bred German Shepherds, and Goldens may have severe allergies resulting in coat problems, skin problems, and weight issues.
The above can be avoided by going with a reputable breeder to find an animal that meets your needs, but this will be extremely expensive. Just something to keep in mind.
#5. Even the most expensive dog of the best lines is going to need training and interaction with your family. If you want a social dog and not a beast on a chain, it needs social activities. Lets face it: a dog is a social animal. You have to provide that.
Also, I
highly recommend a solid foundation of obedience training with a local trainer experienced with your particular breed, preferribly recommended by your breeder. Each breed is different and may require different approaches in training. Your breeder had better be able to provide a list of preferred trainers, or I wouldn't be purchasing from them.
#6. Any dog of the working dog breeds - most notably the German Shepherd, Dutch Shepherd, Belgian Malinois, and Labradore Retriever - are going to have varying levels of high drives. If you don't provide an outlet for these drives (going for runs/long walks, playing ball for an hour a day, obedience training, etc), they'll let you know in ways you'll find unacceptable. This will most likely be expensive and destructive. Its the dogs way of letting you know that you're not providing the stimulation they require. Its frustration on their part, not vengance for being locked up (although it may seem that way lol). They are some of the most loyal, loving, adoring animals on the planet, but they require a tad bit of work to keep satisified.
#7. Personal Protection Dogs. In a word? No. They're more hassle than they're worth (and can be easily stopped by someone who's motivated). They're incredibly expensive, both in finances and one's personal time. You don't just buy one and put it on the shelf like a firearm or other tool - they require daily work to keep proficiency up, with trainers who know exactly what they're doing. They may also open the door for legal action against you in court should they bite someone ("a killer dog", etc.). People have been sued (and lost money) over much dumber things.
Consider that any intruder who's determined enough to enter a home to cause violence, full well knowing a large dog is there, is not going to be stopped by any dog. Thats why the dog's just a
part of the system rather than the entire system.
With young children in the house, I don't think I could ever seriously consider trying to make a PPD a pet. There's just too many variables, too many problems that can arise, and with a young child in the house it's not worth the frustrations.
In short, get a dog that fits your needs from a reputable breeder. Raise the dog and your children together; let them laugh, love, grow, learn, go on adventures, and do stupid kid/puppy things.
When strangers prowl, chances are the dog will do its thing - and then it'll be time to do yours.