I am sure there are folks here who will be able to offer much better advice than I, since I have not really had serious rivalry to deal with before with my dogs, but I do find it very sad that you are already stating that "Gracie will have to go" when there are preventative measures that can be taken. When getting a new pup in a home with an older dog already there, these situations need to be expected and have plans made for what to do if/when they occur.