MadLab and wolfstraum:
Thanks for the replies!! Yes I will continue research and try to keep things as slow and smooth as possible. As much as I want to start off with segregating the house, I think my bf will have a hard time accepting it. (Or maybe he can sleep next to the pup as he wishes, on the couch. lol)
I sincerely hope his parents make the decision to keep their place pet free after this GSD as a guard dog has caused them great disappointment. If they want another dog, I really hope they take the effort to actually look around for one who will be happy and satisfied with the barn cat-ish guard dog lifestyle, although I doubt they even exist.
Meanwhile, the more I research the more frequently I come across topics stating that GSDs generally have strong hunting instinct, and will prey on cats if somehow their wild side kicks in. Is this true and is there any way to prevent it? I mean I believe all dogs are possible to get along with cats, just that with THAT much of a difference in size it's hard not to worry. This girl is really tiny compare to other GSDs, perhaps a small build or result from malnutrition. She's still capable of knocking me over or pulling me down to the ground though with no effort, and she'd shred anything in no time if she decide so.