I'm glad you walked out to hopefully calm down. If you're going to marry someone who has kids and they live with you even part time then you need to treat them pretty much as if they were your kids, with one big exception, discipline needs to be the primary duty of the actual parent (your fiance). No child should ever be made to feel less than welcome in any home he/she has to live in.
Now, that said, your dog also has the right to a safe, comfortable environment and it is your fiance's responsibility to be a part of making the home that way. I don't know how old the kids are but even very young children can learn how to treat an animal properly and can, under close supervision, be a part of the care and training of a pet. This not only teaches them responsibility, it could very easily keep them from becoming a dog bite statistic. So, why not sit down calmly with your fiance and the children and set some reasonable and enforceable rules regarding Champ, rules agreed upon and to be enforced by both you and your fiance.
Also, when you calm down, ask your fiance why he said what he did? And listen to what he has to say without interrupting even if you disagree and even if it's petty. It may not be. He might possibly have some legitimate concerns. Maybe not, but listening never hurts although it might feel like it does at times. LOL