First of all, I admire you and your wife for taking him in.
As far as him being protective, that's natural to the breed. No strangers can walk into my house without being formally introduced first. (That's how I want it) After that, unless one makes a move towards my wife or kids (in an aggressive manner, mind you) he'll leave the visitor alone. I'm constantly on guard when I have company, just in case. He has never given me any reason to think he would violently attack, but as an owner of a protective breed, it is my responsibilty to monitor him anyways.
I don't think you will ever be able to reverse your dogs behavior, as I said earlier, being protective is in their blood. Shepherds are very wary of trusting strangers in normal circumstances, and they're incredibly loyal to their owners. (more protective of women and children for some reason, at least in my case)
The fact that your guy came from an abusive relationship, surely won't help your cause, he's been violated by someone he trusted, in turn he'll have even more trouble trusting strangers. (That is purely my humble opinion)
I wish you luck in getting him to behave the way you want him to, but keep in mind, he thinks he is doing his job by protecting you and your family.