I could be mistaken, but I believe that the dogs were adopted from the THS's 'Bonded Pair' programme --
http://www.torontohumanesociety.com/...onded_pets.asp
These are pets that are adoped out together as a pair, and returned as a pair if need be. From my understanding, this particular pair has been returned several times to the THS already, making this the last chance they have for a home, and another return would result in both being PTS.
Also, from what i understand, Jess also signed a contract stating that if there were problems with the dogs, they were to be returned to the THS as a pair, and could -not- be rehomed by her.
The fact that one dog, regarless of size, has bitten twice is cause for concern all around. I sympathize for everyone involved, and god only knows what happened in Mr.B's past that would give him this reaction. However, now Chad has been attacked. Not bitten, but a bite/tear enough to cause a 4 inch gash, bleeding and bruising.
If this was a larger dog, the results may have been much worse. If it was the Rottweiler that had attacked (instead of the 10 pound malteese mix) and torn a larger chunk out of Chad than a 4" gash, would the situation be the same? Would there be any question about the dog being PTS? Its unlikely that an unpredictable human agressive small dog has the potential of killing someone that a large breed with the same issues might.
The natural human reaction to being attacked is fear, and it seems now that Chad is unable to live in the house with this dog, with the unpredictability of not knowing if he will be bitten again even if the chances were slim to none. The dog can't be rehomed. The dogs will both likely be PTS if returned. A dog trainer/behaviourist may help - in weeks, months or years at this point, depending on how badly scarred this dog is, or how ingrained the behaviour. Can they live in the house for that long with the possiblility of more attacks?
Jess is making a hard decision, and the decision that she feels is best in this situation. I hope the best for her, and the household.