Oh my god. They sound clueless about animals. If they had a dog who had problems with other dogs (whether they were too rough with them or aggressive) they had absolutely NO business getting another dog - let alone a small one! - in the first freaking place. Jeez! We had a pit bull who was very dog friendly, but played too rough to interact with little dogs. Never once did she harm any of our little ones. Because we were smart enough to keep them separated.

You did the right thing backing out. Especially since you have animals of your own. No vet care at all? Has he had a rabies shot (or titer?). It is ILLEGAL to have a dog or cat that has not. So, you would be well within your rights to report them if he hasn't.