Again, thanks for all input. I wanted to let a few days go by before responding because things have been progressing in small steps from hour to hour. Now I can report back with more solid data.
Well, the household is now peaceful. No engagements of any kind in two days. They sleep together throughout the day, sometimes even on top of each other. They are also eating together from either the same bowl or three bowls that are touching each other. And Rocky is on his way to calming down significantly.
How?
Well, a lot of what was suggested here and a few unconventional moves. Most importantly, I think, is that I've been on top of all three dogs from when they wake up until they go to sleep. Constant vigilance and control. It's draining, but it paid off quickly.
The first unconventional move is something that is opposite what one might recommend. I've been trying to remove all toys and lower the "volume" --as I've been calling it. This included making sure my children didn't up the volume by being, well, kids.
Things were going well a couple of days ago, it was nice and warm outside and I decided to run an experiment. My two older dogs love to play with water. They go insane. They love it. They lounge and bite the water streams. This is so much fun for them that I installed an oscillating sprinkler that --the kind that goes back and forth-- up high on a structure. I call it the "doggie water park". When I turn that on they go nuts, start jumping and biting the water streams.
So, I turned on the water park. Rocky had never seen Max and Lady at such a high energy state. Judging from his expression, I think it caught him by surprise. He wasn't scared of the water jets but probably didn't quite know what to make of the whole scene. If I had resorted to tossing a ball around all three would have gotten really excited and it would have led to a scuffle. With the water park Max and Lady went to high excitement and Rocky was happy but confused. He'd go back and forth through the water streams but would not attack them, nor would he charge the other two dogs.
I let that play out for about twenty minutes. They I shut it off and turned on the water hose. Same thing with Max and Lady, they love it and aggressively attack the water stream. Rocky was also confused but now having a little fun with it. I took the opportunity to hose all three of them down really well and clean the patio at the same time.
At one point Rocky got behind me and started to whimper a little bit. That's when I shutoff the water. I interpreted it as him having been intimidated by the display of energy he saw from the other two.
I can only describe the rest of the day as peaceful. They ran around the sun and got dried off but there wasn't a single scuffle. I also saw both Max and Lady behave with more confidence. It's almost as if the opportunity to get really excited and engage their prey drive made them realize they were in control.
The second unconventional move was to actually add to the pack. That same night we had another dog --a friend of Max and Lady's-- stay with us for several hours. He is a very solid standard poodle. Great temperament. He, Max and Lady play and wrestle for hours when they get together. And together they formed a more solid pack that basically put Rocky in his place. For about five hours he was treated to a combination of being herded and having every look and every move controlled by the other three dogs (with four humans supervising).
The next day (last night) Rocky was a different dog. And the next day the poodle came back for a second session. Rocky had a very solid twelve hours or so of pack training in two days.
This morning I let all three dogs out the back to do their business. They did what they had to do. Sniffed each other and laid down under the sun. Not even one sideways look.
Finally, the third move was to take him to the local Schutzhund club. He met a number of other GSD's, all calm and relaxed yet actively engaged in training. We did a little training ourselves --mostly heel, down, recall-- and called it a day.
Once home he rejoined the other two in the backyard and the entire thing was utterly uneventful. Perfect.
I remember watching Cesar Milan's show where he often talked about the power of the pack. It's one thing to see a thirty second example on TV and a whole other thing to watch it unfold in front of you over a dozen hours. I am now an absolute believer in this approach. It requires a solid and stable pack that you can control. That's not always easy to come by.
We are going to repeat the sessions with our poodle buddy on a regular basis in order to cement what Rocky has learned. Thinking of getting into Schutzhund as well.
Now I have to work on jumping-up and nipping (hands, arms and ankles).
Thanks for your input. You guys made me re-engage some of what I had forgotten after being away from serious training for over fifteen years.
-Martin