Have the dog spayed. Unless you KNOW you are planning to breed her, there is absolutely no reason NOT to spay her. It also will improve her health. I was told once that a huge percentage of female dogs die from cancer and often a cancer that would have been prevented by spaying at a young age. There are a lot of people that believe that a dog should be "allowed" to go into heat once before spaying... but every vet I have ever had a conversation with about the subject says that that is "the old" logic, and that now they know better. Spay them BEFORE they go into heat. Just because she has been in heat, doesn't prevent you from having her spayed now, however. But if you ever have another... So talk to your vet and get it done.
Also, dogs are pack animals. If your dog lives in your house, YOU (and all your family members) are its pack. Whether or not your daughter hurt the dog at some point (even accidentally) may be irrelevant, if the dog perceives that your daughter is not dominant over her and is her competitor. You need to do some reading and educate yourself about how to exert dominance over the dog so that you can teach your children. Your son may be too young to learn much.. but your daughter is old enough to learn some basics. It might be awhile before she is really old enough to fully exert authority but she CAN learn HOW it is done, even if she isn't good at it yet. First and foremost, I would say that before playing, petting or praising the dog, your daughter needs to give the dog some sort of command and the dog needs to be obedient... it sets the tone. So do a lot of other little things.... going out the door BEFORE the dog does, making the dog wait to eat until all the people have dined, playing tug toys and NEVER letting the dog "win"....
It's interesting, because your son may be small enough that your dog perceives him as someone to be protected, not as competition. Something like that went on with our pup (GSD) when she was young. She seemed to "naturally" watch out for and be extra gentle with our youngest (she was 3 yrs) but would "steal" socks from our older child while he was getting dressed in the morning (he was 6 yrs). She would also "steal" the occasional toy from his room- and then go HIDE under our daughter's bed with it! Sounds like a more benign version of what you have going on.... Now that my son is 11, he FINALLY is figuring out how to have some real authority in his voice, and that takes TIME for some kids. He has recently started really enjoying playing with our dog. Not playing with her around.... but playing WITH HER. He makes her sit... then hides her toy and then tell her to find it, has her stay, come, etc. When she doesn't want to go "out" in the morning for potty, he will tell her to sit (in the middle of the family room), then to stay, then he'll go open the door and walk out onto the porch, then call her to him... she doesn't hesitate at that point... lol.
Do some reading... with proper training (of your entire "pack") you might discover you have an even better dog than you thought. :)
