Now that's an excellent question. And that's where those handy dandy links come in so handy that I gave at the end of my last post - and why I figure that the people who need them most won't go to them. But there's a plethora a good solid answers to the question of what to do with less than perfect dogs who come into your shelter, and programs that you can start so that you can deal with dogs so that you can make them a pleasure to own and not have to kill them instead of adopting them out. So that you can actually call yourself a no kill shelter because you don't kill your animals instead of just deeming everything that comes in "unadoptable".
And you can tell me that none of this stuff will work in the "real world" - well I can't see how your "real world" is any different my real world, or the real world of the people who wrote these fabulous articles - except that maybe mine is smidge less cynical, or I have a bit more faith in dogs or the people who wrote the articles aren't so willing to take the easy way out. But really - your first stop has to be the article - "In the name of Mercy", and then the "Temperament Testing in the age of No Kill" by Nathan Winograd has the most fabulous example at the end of a less than perfect dog who was able to be adopted without having to be killed - an example that any shelter could follow - it really is a must-read. And it's done with the aid of a temperament (actually, several) test - which is done by several people, over time - with no one person making the decision whether the dog lives or dies.
Information is so wonderful, really.