The easy solution to the Lupin trust-issues would be to re-employ him as a teacher, but not have him live-in. He is, after all, only dangerous at night and only then for three or four nights a month.

So if you decorate up the Shrieking Shack to make it suitable for human habitation as well as angry wolf, and send him off the grounds once he's taught all his classes for the day, the safety issues are dealt with.

Of course, you still have to overcome the prejudices of parents who think that just breathing the same air as a non-turned werewolf is dangerous for their little darlings, but I suspect that the next couple of years will rock the wizarding world on its heels sufficiently that that'll seem like a comparatively minor issue.