Here are a couple of threads by people with similar problems, maybe they'll be helpful!
http://community.dog.com/forums/p/34519/432561.aspx#432561
http://community.dog.com/forums/p/216/3700.aspx#3700
http://community.dog.com/forums/p/54790/470490.aspx#470490
http://community.dog.com/forums/p/8173/105711.aspx#105711
Hope those are useful for you! Basically I think you'll have the most success if you 1) teach your dog a super-solid "leave it" or "freeze" or something similar, 2) get your cats un-afraid of the dog, 3) give your cats a dog-proof "escape area," and 4) work on desensitizing your dog to running cats. Good luck!
Great job keeping Petey on leash for now, by the way. And welcome to the forum :)