Rehoming a dog is not a bad thing if you find you are over your head with the dog.
Not all shepherds have like exercise needs. None of mine need an hour a day walking. But others need a lot of exercise.
I think when people go into getting a dog breed, they are not always 100% well versed on the breed and the needs of the breed, the different lines and their pros and cons, the different bloodlines within the lines.
You can try to rehome the dog again with help from a rescue if possible, or you can choose to try to work on her issues.
I think that either way, you should probably get her enrolled in classes, and start working on the issues so that if and when you do rehome her, she will be started on the right path.
First thing is definitely to contain the dogs properly and not allow them to get loose. I know that you did not let them out of the yard, but now that you KNOW that they can get themselves out, and what they will do, you need to be a lot more careful with them, go out with them, and use a long line if necessary. This protects neighborhood children, your dog, and yourself.
2. Is training classes. If possible take both dogs to separate classes, even if they have been through classes at one point. Just expect to keep on signing them up, and taking them until you have a good working bond with each of them separately. How do you know when this has been acheived? It is hard to describe really, the dog should listen to you with or without treats, on lead or off lead, with distractions, and only the tone of your voice should be sufficient to correct them. This really does not happen overnight. It may take four or more SETS of classes (six to eight classes in a set).
Also, look up NILIF -- Nothing in life is free. Get a good handle on what it is, explain it to your wife and both of you apply it to both dogs.
Good luck with them, whatever you decide.