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  Sorry to hear about your situation.  I would definitely tell your daughter that in the best interest of the dog, that she should leave him with you and that she could come and visit.  If the dog was shaky and acting strange the first time, then the 2nd time may possibly be even worst.  In addition, putting the dog under stress like that will certainly effect his health.  
 I'm in somewhat of similar situation with my parents who's now caring for my cat Suki due to my DH allergies.  However, I've always picked-up and paid for the food, litter, treats, etc. for Suki.  I check on him occassionally and take him to his vet visits...etc.  Now that my parents are caring for Suki, I think of him more of a family pet and not "MY" pet.  I hope everything works out for you and your daughter.
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