Update, for those who are interested:
Our little guy is doing WAY better. We had an odd setback a couple of weeks ago when he suddenly hurt his leg while out for a walk. Two vet visits and five x-rays later, and they couldn't find a thing wrong with him. The vet said it must be a pinched nerve. Poor baby was in SOOO much pain, and we felt so bad. He got a cortisone shot and some pain meds, and he was his old happy self two days later.
The results of his allergy testing came in. He isn't allergic to enough things to do immunotherapy (allergy shots), so that's off the table! Strangely, he was only reactive to two things: oak trees and storage mites. Apparently storage mites can live in big bags of dog food that's been open for a while or in a storage container. Funny, we had never even heard of this, and we had been getting him giant bags of food and keeping it in a large container. The solution to this is to get him small amounts of food, only enough to last for 30 days, and keeping all of it in the freezer. This, plus the meds (we took him off of most meds so that he's only on 2-3 now) and new shampoo has made him much better!
He's not 100% - we took off his clothes for a bit to see what would happen, and he went straight for that hot spot, making it raw and red in an instant. So, maybe he'll always need clothes. That's ok. He's not itchy anymore - we can run our hands over his back and he no longer shakes his leg like crazy. His skin isn't pink, his awful smell has almost entirely cleared up, and his fur looks much nicer.
I'm not super optimistic that this will last forever, as he has had periods where he takes meds, clears up for a while, and then relapses, but this is the best he's been in a long time. We also found a much lower cost vet that we can take him to when he develops infections and other problems.
So, we are no longer thinking about rehoming him. Thanks to everyone for their support and advice! If you don't see more posts from me here then be assured things are going well and our family has remained intact.
