do you have a large yard? dogs are pack animals, and they get really lonely when isolated. i'm against euthanizing, but unless you are going to get a second outside dog to keep him company, i really don't think your pooch is going to be happy. he considers you his pack, and adjusting the living arrangements to meet your needs aren't necessarily going to equal meeting the needs of a pet dog. he isn't going to understand why he can't be with you two while you're watching tv, reading, eating, and doing all the group activities he's used to being a part of. my dog would be miserable if being indoors meant being locked up in a cage while fun was going on without her
you aren't going to even consider finding a friend to take him in?