I'm really sorry for the stress you're going through, but remember, this little guy survived what many don't! You're very lucky and so is he (especially to have you asking all the right questions)
Remember, I (nor anyone here) has seen your dog and making any decisions without seeing the damage, the location of the damage and extent, is really best left up to the doctor who did see him.
1. His leg should grow fine. Especially with the procedure they advise. In fact, I'm thinking they're recommending them so his leg DOES repair almost like the accident never happened.
2. There is never a guarentee. Did the person who hit the pup stop? His insurance should pay the vet bill. If it was a hit and run (that's even sadder), tell the vet you can't afford the treatment, at least all at once and ask him to work with you.
Good vets are going to put the animal first and try very hard to cooperate with you.
3. Yes, it's a bigger dog who is expected to get heavier than a poodle. Also, the weight impact is different than with people, the physics are just not the same.
4. You already had an EKG done? I'm with you on this one. I'd really question the need for another one. Ask them to put their reasons in writing (sometimes that discourages unnecessary pursuit of procedures).
5. Dogs can do well with three legs, even just two in some exceptional circumstances, but this is just a pup and he sure deserves all four legs if possible.
Untreated breaks have many complications, including throwing bone growth off in his shoulders, neck and spine problems; things that will be ongoing expenses and probably painful, arthritic condtions later on (not necessarily that much later either).
Sometimes when someone (arrogant) rubs us the wrong way, we question everything they said. Plus you're feeling pressured. Not the way to proceed with this! They let him go home, so I'm wondering about that too.
I'd probably have a 2nd opinion come Monday and explain every thing the way you just did here. How about your own vet? How about the vet for anyone you know ? Referrals and recommendations are great ways to find a good doctor no matter what species.
In the meantime, please keep the pup a little calmer and more restricted. Not putting too much weight on the leg and letting the splint do most of the impact control.
Here is a place to begin more research about the fracture (I'm not sure where exactly it is, but you'll find your way around the site and get to it I'm sure)
http://www.petplace.com/dogs/fracture-of-the-humerus-in-dogs/page1.aspx
check back with me and let me know what they do, what you do and how it goes ok?
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You remain responsible, forever, for what you have tamed.
