Poor Choice?

IMO this is just normal behavior for many breeds, if not all puppies that are very young and don't understand boundaries.  This is how puppies play with each other.  I would not attribute it to "herding" or anything like that.  You will find Labs, Huskies, even small lap dogs that behave the same way as puppies.  Do not excuse and allow it because she is a herding breed.

With puppies I basically overcome this through management.  The puppy is on a strict schedule of time in a crate or puppy pen vs. free time that is generally structure with play and training and has plenty of dog toys about for redirecting the puppy.  One problem I see a lot with kids is that they run around fast and make high pitched noises which excites the dog, and often they jump away or pull their hands away from the dog which only gets the dog more excited in prey drive.  If the kids are playing with the dog make sure they have plenty of toys for the puppy.  The puppy needs plenty of exercise so she does not get bored and destructive.  If she is too nippy, put her in a crate or pen with toys and things to chew on.

You have to train the kids as well as the pup and the kids shouldn't be alone with the pup at all right now, until she's learned her manners.

Pups explore the world with their mouths and your pup is no exception.  She also *could* have stayed with her litter a bit longer to learn better bite inhibition.  When I have pups, I ALWAYS have pockets and a fanny pack full of ok stuff to chew.  The first approach of teeth gets and "eh eh, no bite" followed by an immediate presentation of a toy and "THIS is what you can bite" along with lots of praise when she chews on that instead of me.  the "scold" needs to be calm and low key, by the way.

Now, heres a hard fact of life.  Little kids run, they squeal, they make allll sorts of "prey animal" sounds.  While the pup is so young, they need to be cautioned NOT to do that stuff around the pup, and again, don't leave her alone with the kids, ever.

 The only way for a dog to get over obnoxious behaviors is through training. Have you enrolled your dog in any training classes?

While she might be too young for actual training classes, puppy socialization would be a great start.  Check with area trainers and see what they offer and how young they start training.

Right now i agree that most likely is natural normal puppy behavior and not necessarely herding behavior. Now in the furture when he gets older he might switch to herding behavior and actually start herding yor kids but you should not worry if you can teach him what he is allowed to herd and what he is not.

My Malamute what bred to pull and I taught him not to pull while on leash. Evene when breed specifics can not be "trained out" of a dog you can teach them when to "turn them on" and when to "turn them off" as long as you dont want them "off" 24/7. You will need to fufill the need for him to do something like herding real animals or similar in the future

Check for local herding clubs in your area which most likely will already have events to fufill these needs, these clubs are also great for socialization and the members are always thrilled to have a new puppy around.

Also when he gets older I recommend to buy a herding ball

http://www.boomerball.com/

 I own a herding breed and when she was a pup any kids that came over were given these instructions: No running, no screaming and no wrestling. This worked quite well and now I have a 6 year old that will never use her teeth.

tiffy

 I own a herding breed and when she was a pup any kids that came over were given these instructions: No running, no screaming and no wrestling. This worked quite well and now I have a 6 year old that will never use her teeth.

Great advice, and this puppy is NOT too young for puppy kindergarten.  In fact, if I were you (and I own herders, too), I would enroll asap in a good *positive* (meaning lure/reward or clicker) class.  Herding dogs will not stop this behavior without training and management, as it is hard wired for them to desire to stop movement;-)  But, if you socialize the crap out of them (that means off leash play in puppy k - don't take the dog to a school that doesn't have this if you can help it, even if it's pricier), and train early and often, you will have a peach of a dog!!!

Living proof that you can teach a herding dog not to herd when you need them to: http://www.youtube.com/user/sequoyahbean?feature=mhum#p/a/u/0/Di3cH2T6sHc