
Has he had a thorough vet check, including blood panels (incl. full thyroid panel)? If his behaviour has deteriorated after years of being fine, there may be something up with him. Thyroid problems certainly can manifest as all sorts of behaviour problems.
If there's nothing medically the matter - and have the vet check him over physically, as dogs hide pain well and he may have something that's causing him discomfort - then I would get a behaviourist in to see him in his home environment and better advise you. www.apdt.co.uk is a good place to start.
Given the timing - when your younger child was about 6 months - is there any possibility that he has become jealous, or that that child is doing something he doesn't like? The barking on the bed is intriguing; it could be a sign of discomfort, frustration, or maybe even eyesight troubles - or something completely different. But of course it's impossible to say for sure over the internet.
Also, can you define "extremely aggressive"? What some people see as totally unacceptable may simply be a careful warning from the dog, a little more detail would help on that. Offering a treat is not rewarding the behaviour - that would only be the case if you gave him the treat and allowed him to carry on! I would start doing swapsies with him - try to keep whatever he's pinching out of his reach for now (difficult with young kids I know), and start swapping low-value stuff (whatever he'll hold but isn't particularly interested in) for something he wants, such as the treat. Build it up gradually, swapping higher value toys etc for higher value treats, so he learns that giving something up is a good thing.
Personally I think a vet check and behaviourist visit is your best course of action though - the B will be able to see very subtle behaviours and signals that you may have missed, as well as seeing the behaviour in context.