I was also bitten when we'd had Sweep only a few weeks (first grey and first dog as adults). My husband had just left for a movie so I was home alone, brushing her on the floor with a Furminator, when suddenly she lunged and got me right below the eye. I am not sure if she dozed off and then startled or if I hit a tender spot with the Furminator (Zoom Grooms only now!). My bite wasn't severe enough to warrant an ER visit but I spent that Christmas with a lovely black eye. Regardless, it was terrifying and horrible and I experienced the same emotions you're having. Sweep immediately tucked her tail and crated herself while I sobbed at the thought that my husband would almost certainly insist we return her. Fortunately, that was not the case. When I had a few hours to calm down and think rationally about it, it was clear the fault was mine because 1) she was still new and adjusting to us, 2) I shouldn't have been brushing her while she was lying down, and 3) I probably shouldn't have been using the Furminator on her at all. Now that you've researched space aggression some and have a good theory on what triggered the bite, I am sure you realize Lester isn't really an "aggressive dog." I commend you for not punishing him and for understanding that he also likely picked up on the stress and tension of the situation afterward. If there are no kids in the picture and you're willing to work on or around his space (and/or sleep) issues, then why not try again? It sounds like you love him a lot and he's lucky to have people who put so much thought into doing right by him.
As for recovering emotionally, it just takes time. I work from home and am with Sweep almost 24/7, so I just had to press on in spite of my initial wariness/fear. I also researched calming signals so I'd know what to look for when she was feeling uncomfortable or unsure about something. It's been almost two years since and we have never had another incident; Sweep is a goofy, well-adjusted, snuggly velcro dog. Try to see it from the dog's perspective: they live in the moment and every day is a clean slate. Whatever you decide, you have support here.