I agree that it may be hard to rehome an older pet. You may need to give your dog an area that the kids can't get to him when he needs a break. I have a 14 year old Aussie that is mostly blind and will growl if she doesn't know its my daughter and thinks its one of the other dogs. We have our kitchen gated off, and my Aussie stays in there if we are not going to be watching the interaction between my daughter and her, and also when the dogs are eating. She is happy to have peace and quiet, and she gets time with us after our daughter is in bed. If you decide to rehome your dog, try to place him personally to a good home, as it is very hard for older dogs to adapt, especially when, as you said, he has always be your baby. I bet you would be surprised at how little personal time he really needs to make him happy. Also you can teach your daughter what is appropriate and what is not as far as what is too rough a play for him, and have an area he can go to where the kids can't bother him.
Good Luck!