I think you are doing things the right way by being firm with him, it sounds like he has a strong willed nature and is going to try it on with you.
Evie was very much like that at first and I was quite shocked because Molly is the total opposite ,very meek and mild! But I have a no nonsense attitude with her and she gets away with nothing! :wink:
At first when she had a treat if I went near her she would bark and growl, so I would offer her something else and praise her when she let me take it,now there is no growling or barking.
I think he is still growling at people out of fear, I think it just needs time and patience and I'm sure he will grow out of it. ( as I've said before Evie was the same with strangers and she also screamed at other dogs )
Have you a friend with a calm and laid back adult dog, that you could spend sometime every day with? This might de-sensitize Bailey's fear of dogs.
Something I learnt with having Evie that socialisation is not just something for the first few weeks, it's an ongoing thing that needs working on, because she has a very fearful nature and needs reassuring all the time.
He is still very young and I'm sure with your help and understanding he will turn out just fine, it might just not be as easy as it was with Blue!
Lizzy Molly and Evie