I don't have a quick and easy answer. Protectiveness and distrust are bred into most Shepherds as part of their herding heritage. The relationship between genetics, socialization, and behavior isn't fully understood. Penn State is doing a big study now. Different lines of a breed vary. Even littermates with similar socialization show variation.
It sounds like you are doing a good job on the socialization. Were you able to get Scar out before 12 weeks? That is a very important time. Too many breeders hang on to the puppies too long, making proper socialization more difficult. 7-8 weeks is the best time for a puppy to go to its home. It could be that he is going through a fear stage. Even the best socialized puppies can go through that. Much of the aggression is fear based.
Have you obedience trained him? The dogs see all the
people and dogs in the household as a pack with each having their own rank in
the pack and a top dog. Life is much easier if the 2 legged pack members
outrank the 4 legged ones. You can learn to play the role of top dog by
reading some books or going to a good obedience class. A good obedience class
or book is about you being top dog, not about rewarding standard commands with
a treat. Start at
http://www.dogsbestfriend.com/. The dog that has a strong leader can let the leader worry about the dangerous people. The other thing is to control your stress and effusively welcome the people, pushing the limits of acceptable human behavior. I once had a dog that was afraid of ladies in broom stick skirts. The advice was to go right up to what the dog was afraid of and pat it. Yeah, and get slapped silly? Hopefully you can work him through this and it will pass.
You may want to try a head collar in place of the prong collar. The leading brands are Promise, Haltie, and Gentle Leader. They have a
strap going around the dogs nose looking something like a muzzle. They work
by pulling the dogs head around. No other way gives you such great control
with so little force. Did you have a highly experienced person help fit the prong collar? Fit is very important for them. Otherwise, they can be less effective or injure the dog. Most people can do fine with the head collars just following the instructions that come with them. You need to carefully retrain yourself not to give the snap you do with a slip collar or prong collar.
At 3, Romey's personality is mature and should not be changing much. Sounds like he is settling into a nice dog.