Bring the family to a dog park sometime. Seaview is pretty good, right next to me, and there are a lot of dogs there, all different shapes, sizes and breeds, and almost all of them getting along. There are always going to be the odd skirmishes, but it could introduce your kids to bigger dogs, you can test which ones might set off your son's allergies and your wife might not be so nervous of big dogs. There are quite a few Great Danes that show up from time to time, so she'll get to meet them in the flesh and see they are very gentle. Of course, she'll also see just how bloody big they are and you might win one battle just to lose another! Def
And just my personal prejudice: I would never trust a small dog around children. I wouldn't let a big dog be alone around children either (of course), but I'd be a lot more relaxed.