We took a chance and adopted a dog yesterday that had been in the shelter since august. She had been turned in for biting a puppy after the owners had her for 6 months (they had originally adopted her as a puppy from the same shelter). She is a lab pitbull mix but looks mostly like a medium size lab. She's very friendly and hyper. She growled once at the cats after a few minutes of one standing all puffed out near the dogs crate but seems fine with other dogs and people when out on walks. My concern is in the long term how worried should we be about the cats? Even if they get along how likely is it she might get aggressive when playing and accidently hurt them? I really don't want to have to keep her crated when no ones around to supervise forever. I don't think its fair to her. We are on the fence about keeping her.

The way we test greyhounds (have done it for 20 years) is to muzzle the dog, leash it, and present it to a cat; depending upon the reaction (it is an art more than a science, I can't really describe all the behaviors here) we put it in the Yes Cat pile or No Cat pile. It is possible the dog is just crate aggressive, doesn't like any animal near it when it is in a crate. I would have an expert test things out for you. Find a trainer recommended by the shelter or your vet if you can.

IMO and it's only MO without expert opinion I would return the dog.