It really does sound like a dermatologist would be a good option. Atopica (cyclosporine) is a good drug and one that should be tried, esp. if your vet isn't very concerned about stomach irritation (because you are right, it can irritate their stomachs - but then all drugs can). It can be started with an anti-emetic for the first week or so to try and stop any potential vomiting. My girl was on it briefly. She has a horrible stomach and did fine.
Atopica use and food elimination trials would have you going in two opposite directions. Atopica doesn't really work for food allergies. So I'd do one at a time. You are right. The diet is unbalanced and could cause major medical issues. If you homecook, the recipe needs to be balanced by a veterinary nutritionist. If you dn't want to, then there is nothing wrong with feeding dog food. You can use a food made for allergies with hydrolyzed protein sources. It takes two to three months on the allergy diet (with no chews or treats) to be able to tell if it's helping at all.
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