We have 3 dogsm, and I've been involved with training/limited breeding/showing for some years -- we have 2 Chesapeake Bay Retrievers and one Lab. Chessies are a protective breed -- not to the extent that blue heelers are (blue heelers, I understand are a very "primitive" breed... much more instinctive and less domesticated), but definitely feel that they "own" their people and property... and definitely more formidable for trespassers.
I am a big believer that kids and dogs should NEVER be left alone together. Kids are too spontaneous, and even the sweetest of dogs has canine instincts... and if a child hurts or startles the dog, they might react. It's important to remember that an adult dog will correct an "uppity puppy" by "alpha rolling" the pup (knocking them down and turning them over) and holding them down by the neck or biting them on the muzzle. Not surprisingly, the majority of bites on kids occur on the face!
Our dogs were our babies before our first son, and we still take a lot of time with them... but they are outdoors more than they used to be, and they no longer have free run of the house unless I'm there to 100% supervise.
All of that being said, our dogs love our kids... the biggest problem I have is that my Chessie bitch wants to lick the kids up one side and down the other 24-7... it gets to be a bit much. With Chessies, it is more common for the dogs to become extremely protective of the children rather than aggressive toward them... I've heard of this causing problems when they are rough housing with friends... they'll perceive danger and want to protect "their" kids.
I should also add that I only bring the dogs in one at a time now... but that I'll have them in and in a "down" when I nurse the baby... I believe that they can smell the milk, and it shows them that this baby is mine... no dog in their right mind will mess with a "bitch" and her puppy...
We also try hard to give the dogs individual attention -- MUCH harder than it used to be -- but we don't want the dogs to be jealous.
One other thing -- when I'm screening families, I'll only sell puppies to families w/ kids (esp. young kids) if they are committed to going through a full year of obedience training with their dogs. Our 3 are all trained on voice and hand commands, and it is so helpful when you are trying to keep the dogs under control around kids... Also, the training establishes you as the "alpha" (top dog) and gives the dog important thinking activities.
With a smart herding dog like a blue heeler, you might try agility classes -- they seem to excel at that sport, and it's fun for the owner/handlers, too...
I have some good articles on dogs & kids that I've given out to my puppy owners... let me know if you are interested, and I can send them to you via email...
Susan