Okay, I talked to my Dad and here is what it's called:
Puppy Strangles. It's blisters everywhere/various places on the body, especially the muzzle.
Here are images, does it look like this?
puppy strangles - Yahoo Image Search Results
Apparently, it can also happen in young adult dogs. Vets often misdiagnose Strangles for something else...my Dad's vets said it's bc they almost never see it.