I may be going against the grain here, but...
You say that Dog3 is a lovely pet, until it comes to resource guarding - and that it's never met a child who is smaller than it. It may well be that Dog3 will turn into your baby's fiercest protector/ally through life. A dog is "programmed" to belong in a pack - to accept its position within that pack, even when there are human members of said pack. And a dog pack? Always protects the youngest members.
However, you also say that Dog3 has been horribly abused in life, prior to you and your husband essentially falling in love with him. You say that he gives warning nips... most dogs, even the most benign of dogs do, if they feel too encroached upon. How is his relationship with your FIL now? Because you didn't say. Getting into the kitchen bin...?! That seems to be one of the joys of a dog's life, I'm afraid (I have a 12 year old, non-rescue Spaniel who will move heaven and earth itself to get into the bin - and he's a retired gun dog, who is impeccably behaved otherwise!).
When I was born, my parents had two German Shepherds - a dog and a bitch - who hadn't been around any child below the age of 10... and even then, only for a day or so at a time. My parents were advised to get rid of them prior to my being born (having already rehomed a bitch, who bit my mother whilst she was pregnant with me, with my grandparents). Turned out, those two GSDs thought of me as "their baby", and one actually gave her life in order to protect me when I was 10. My parents were arrogant enough not to listen to the midwives advising them to be rid... and it worked out. It really did. But it so easily couldn't have. They might have ripped me limb from limb... but because I was a helpless infant, their instinct to protect kicked in (the dog would avoid me until I started to crawl, and then he'd pace alongside me and head me off from the sofa which I used to get beneath, then be unable to reverse back out from!). The rehomed dog? Turned as soft as butter once removed from the stressful situation of my parents home prior to my arrival, and I remember sitting for hours trying to plait the long lengths of fur on top of her head, when I was very young.
Personally, I've also had a dog grow up with a toddler - we have a 12 year old Spaniel and a 13 year old boy. They are the very best of friends. We also have a 21 month old Kokoni bitch, who is very much my dog, but who adores the very ground my son walks on. My daughter may start a family of her own within the next five years or so, and I already know that my little Kokoni will have to be watched incredibly closely around a baby. She adores toddlers, but a baby's cry? Hurts her ears... and a dog in pain, or frightened, is a dog who will use its teeth to protect itself.
Essentially, what I'm saying is this. There are those who keep a dog like yours... and it all works out for the best. There are those who treat dogs like they're simply disposable; only in our lives because it pleases us, in that moment, for them to be. There are those who would at least try in your situation, to work it out without the dog - who, to be fair, has had a shit life prior to meeting you, and was in your life before your baby was... and there are those who will insist that you must, simply must think the very worst will happen and you have to get rid of the dog you love, to safeguard your baby.
Dog3 has issues. But Dog3 may... just may... turn out to adore your baby, consider it to be the future of their pack, and protect it with every fibre of its being (by which I mean love it unconditionally and guard it from unwanted situations). Alternatively, you could simply presume the very worst about Dog3's personality and get rid. No one here can make you choose one option or the other, I'm afraid.
That has to be your choice alone.
And I truly hope, for Dog3's sake, that you make the right decision for him, as much as for yourself. Because PP's are right. He won't be rehomed. Not now. I love dogs, and am all for rehoming (I fostered, then adopted, 5 cats over the years, all from shitty conditions/lives prior to meeting them - my oldest cat, who is 21, was only 3 weeks old when he came to live with me, for example, and has psychological issues galore... but even he reacted in a positive way when I was pregnant with my 13 year old, and still adores him), but not even I'd take on a dog who had been through the system 3 times. Impending baby causing the third time, or not.
Could a family member take him on until the baby's here? Until you can see how he reacts to the baby? That might be an option. Because yes; the organisation said that they'd be happy to take him back... but, let's be honest about this, they don't really want to. They want him in a permanent home where he's settled and loved. A home where he's not going to be treated as a disposable commodity.
, because it's not going to be an easy choice for you to make.