I think you did the right thing for your girl. I would never suggest someone keep a dog with aggression issues in a house with small kids. It's not fair to the kids and it's not fair to the dog. If she had seriously bitten a child, she would have been in danger of being put down.
We have had a very dog aggressive dog as a foster. We had to watch him every minute. If we left the room for 30 seconds he went into his crate. If he even looked like he was thinking about starting something he got corrected. If we had had children there is no way we could have watched him like we needed to. He ended up being a fabulous dog, but it took a lot of work.
By letting her go you kept your boy and your kids safe. You also kept her safe from doing something that could have possibly had horrible consequences. As irritated as we can get for people returning dogs, I would never fault someone for not keeping a dog with aggression issues. It's not something to take on unless your situation will allow you to give it 100% of your attention and there's just no way to do that with kids in the house.