Thats nice to hear. I've always heard a lot of stories about children that young getting hurt by dogs, I guess it depends on how aggressive your dog is and which breed you have.
That sounds pretty reasonable. Everyone has a different way of handling their dogs based on how they have been brought up. You should continue doing it as long as you know he is not being hurt, doesn't matter to me what a spectator thinks. :D
Lucky you found him. Its good to know that it ended up that way, its always terrifying waiting or hoping for them to come home (happened to one of my friends).
Most dogs try and get the most attention they can get from you, you just have to be able to set limits when they are young (training :D). This sounds like a sad story if what I understand you are remembering your dog that passed away in 1991.
Being a dog psychologist just means you understand what your dog is thinking. From what I can tell, the more time you spend around your dog, you will get more familiar with what they are thinking.