wow thats rough, sorry to hear that. first off you have to work something out with the kids or u will be forced to put her down. is the dog going to bite kids because it bit a couple dogs that made her bug out? apples and oranges, dog aggression is a pits trait, human aggression is not or they would never have been able to fix injured fighters or pull them off dogs in the middle of the fight. she loves ur kids,,,just not trusting of other strange dogs around the house nd you guys.
the dogs lived, take care of the owner however u can and No u are not going to jail..they want 500$ just hand it over and have a trainer work with the dogs to keep a good distance from the door of say 7 feet when it opens,, tough to keep kids consistent. work on the dog as well and u will have a better chance. in the blink of an eye it will happen again, solve the root of the problem. next time you will not have an option.