BBD:
I think we are on the same page, at least to a point.
Your response the the exhibited behaviors is entirely appropriate with the behaviors you observed with your own and sister's dog fault with it, especially with puppies / young dogs...we do the same in the situation you describe. We always had multiple dogs, mostly dobies and labs, never had to deal with resource guarding or dominance issues. But, let me ask this ... is it not appropriate to tailor your approach depending on the gravity of situation ?
I don't feel it's adequate in situations where two adult dogs (who have only had a number of days to acclimate), are battling for dominance, one dog has the other pinned and, and serious injury is an immediate threat....especially when the situation repeats itself. If your GSD was 3.5 years old and pinned your sister's dog the ground on several occasions, I'm fairly confident that you wouldtake a modified approach ... if not I expect you'd have gotten quite a tongue lashing from sis.
With the 1st attack over the the squeaky toy, I wrote it off OK, they doing their pack thing, let's make the argument moot, give them another toy. With the 2nd attack, I stepped in and taught them that hey, you can both play with your own toys 2) look,you can take turns playing with your own toys, and 3 it's not gone forever. It worked .. well, reasonably enough, we went 2 whole weeks. Lay this on my shoulders a bit, doggies tend to leave their toys all over the place but not out of the den. When new dog came up to office with just one, I didn't see it and WW III ensued.
Our dogs play together all the time, they almost never stop ...outside / inside, toys / no toys, at the park they play only with one another. But it's been established that they have a trigger ... the squeaky toy, and it's not just typical intra-pack dominance behavior.
I see nothing wrong with your response w/Sis' dog, I see nothing wrong w/ OP continue as he is doing ....nothing wrong with individual play time as was recommended above by Kecha ... I do see a value in demonstrating that everyone gets their turn. Most of the time the dogs go out together, once a day in morning wifie takes them out one at a time. In beginning, the one inside would whine and pace, after a week, the one inside would just go occupy herself checking the door now and then, now at 3 weeks, if I call one, the other doesn't even get outta bed....
yeah no big deal,I'm gonna get my turn soon, let me nab a few zzzz's
But the reason I relayed my Husky mix experience is that, in the OP's case, there's history ....
-The dog tried to kill another dog (female in heat = resource)
-He has killed another small animal.
-These are Huskies; Labs are the most popular dog in the USA, Huskies I think are in the mid teens. If you were to do a web search for news stories on dog on dog violence, I'd guess that Huskies are near the top of the list ...not that there's this huge amount, but by comparison w/ other breeds
-The dog has not reached the maturity where such negative behaviors present,will this behavior escalate ?
Not much to do at this point that hasn't already been said ...but I think vigilance is warranted; given the breed and history ... Would you not agree that should negative behavior escalate to the point where the well being of one of the animals is threatened, that the response be appropriately modified to fit the situation ?