I have a GSD who is now 3. When he is excited he mouths still - luckily he's got good bite inhibition so it rarely hurts and then only if he catches you wrong. Hopefully that is all this is.
There are different types of "bite". This sounds like puppy mouthing - which should have stopped by 1.5yrs BUT if a rescue dog wasn't taught that this is wrong, then you can't blame the dog. This can easily be trained out of them as there is really no malice involved. The second attempt was probably still in excitement if this was mouthing i.e. part of the game.
Nipping and biting with lunging are obviously more serious, and would need a professional to assess.
Obviously we cannot know as we weren't there what this was, but please do not panic.
Ask DS not to show any fear (easier said than done, I know), and to try and treat the dog the way he normally did. But be on guard to make sure no one does get hurt.
Other than this incident, has there been any other worrying things?
I would just try and act normally, but keep dog and kids seperate if there is likely to be any excited shrieking, until you've had him a bit longer and can start to read his signals a bit better.