The thing is, even though nothing happened today, it could be just one or two incidences that caused some fear with strange children. My friend a few years ago had a very sweeet Husky who was great with kids, but when a neighbors 12 year-olds harassed him on a daily basis through a chainlink fence and when they came into his yard, he bit one in the leg - nothing serious at all, just barely drew blood - but animal control took him away!

I'm guessing that this aggression will not be directed at all toward kids he knows, especially your daughter. But you need to see a behaviorist ASAP to get really customized advice, to nip this in the bud right away. Dogs who are in their backyards often also become much, much more protective of them. Gonzo used to be outside most of the day and come inside at night and in the afternoon, and he was MUCH more aggressive with passerby's, displaying the behavior that you said Nicki does. Of course, it was all totally show. Now, he has a dog door and spends most of the day inside (because he really does prefer it) and he almost NEVER barks or cares about people/animals passing the fence. If a dog spends most of their time in the yard, alone, they see the yard as their space and will feel the urge to guard it from strangers. I'd say do your best to keep him indoors where he's safe - in a crate with a stuffed Kong or chewy and with potty breaks.

Also, is Nicki neutered? This can be a big factor in protectiveness. Many dogs will act very snarky behind a fence, and be fine normally.