Bless you! You are soooo right not to hit her. There is never a reason to hit a dog - all it proves is that the person hitting the dog has no imagination, no control, no understanding and no right to have the welfare of a dog as their responsibilty.

When you are not in the house you should seperate the cats from the dog.
As soon as you get in let the dog out to toilet and then put it on a lead - control of the situation is the key to this. For a couple of days concentrate on control of the dog. Show the dog that you are happy when she lies down and is relaxed. Then open the doors and let the cats come and go as they please keeping the dog on a short enough lead that she can't make a dash for the cats but otherwise ignoring her. Once the cats realise that she can't run at them they will be more inclined to come forwards and ivestigate her and she will not be stimulated to chase if they don't run away. In a couple of weeks this is probably the best you can hope for and you will be suprised how quickly you adapt to having a doggy buddy with you as you move around the house.
I often look after my friends Dachie and she was a nightmare with my cat at first. Once she realised the cat wasn't going to run away she actually has become pretty submissive to him and the cat takes great pleasure in making sure that the dog knows who is boss by sitting next to her and staring at her for minutes at a time! They are now fond of each other and greet each other every time they meet.