> What caused this change.

The honeymoon period is over

> Was she abused in her younger life?

What does your vet think?

> Did she deveoped a new trait to protect us?

Probably something else, less flattering.

> What can we do, we are in our late 80's, cannot travel to a dog trainer?

Have a trainer or behaviorist come to you. They will show you some techniques, mostly your behavior that will effect the dogs behavior.

> We will not give her up.

Make some calls and get this straightened out so this doesn't turn into a hard-to-break habit. There are several books on the subject of that breed that might also help.

First off, thank you for rescuing your dog. That means alot. Next your dog does not have to be abused to be aggressive. It could be that the dogs has always been aggressive and that is why the dog was turned in...There is alot you can do to stop this behavior. First and foremost you need to be willing to train your dog and to become top dog in your house, and every two legged needs to be top dog, not just one.
First thing you can do is walk your dog for about a half an hour at least once a day. Chi's need walking as much as a shepherd or any other dog does. Walking will do a number of things for your dog, help it release pent up frustrations, get it to experience the world and all the new smells and sights and sounds. ALl of these things take the dogs attention which takes up energy. Dont be afraid to take your pup out, if it has had all of its shots. I have taken a teacup Chihuahua (3 pounds) on a 5 mile off road hike, and she did great.
When leashing up your pup, make it come to you, if you need some training treats I suggest getting a natural Balance meat stick and dicing it up to help out if you find your dog resisting your commands. When you get to the front door, have your Chihuahua sit and stay. Your dog should be calm before going on walkies with you. YOU WALK THROUGH the door first ALWAYS. Have your pup sit while you close the door. The pup should be walking at your side, not in front of you. I usually let the dogs I am walking sniff around and do their business the first couple minutes of a walk, then you should be walking, no mre sniffing each blade of grass.
Be sure and talk to your dog while you are walking, I find many people dont talk to their dogs enough. Yet we expect them to understand what we want. Dogs just want to please you, so keep that in mind.
If you come across another dog or person, put your dog n a sit, stay. Dont pick up the dog. If it jumps on you, put it back in a sitting position. Your dog should be doing this with each person it meets. In a calm manner it should be sitting when you ask it to. If a person comes into your house, put your pup on a leash, have it sit and stay. And you need to practice this when nobody is in your home. Each time your pup growls or even alerts (puts ears up, stares at a person - you remind that pup that it is to behave by giving a tiny pop on its choke collar, and giving a command to Leave it. It is not going to hurt your pup, but it will remind the dog who is boss and this is necessary.
I have found many Chihuahua's to be non chalant about this technique, especially ones who have gotten aay with this behavior for awhile. So if the dog is not paying attention to your trying to get it to settle down, I have found that putting the dog on its back in a forced submissive position works well. Keep your hand firmly on the dogs chest, and repeat commands to LEAVE IT, if the dog continues to be aggressive towasrd someone.
You have work ahead of you. It would help if you started the sit and stay and leave it commands immediately. To practice LEAVE IT, you can place a piece of training treat on the ground after putting your dog in a sit stay position this way you can practice the Leave it command, and when you go out on walks or when someone comes into the house, you can tell your dog Sit, Stay and leave it.
You might become frustrated, if this happens, just stop and take a break. Dogs are acutely aware of our energy, and to become frustrated will only muddy the waters.
I would love it if you reposted on a regular basis so we can learn how things are going for you and your puppy. Dont be afraid to ask questions, the people on this forum are great, and Im certain you will be able to handle your dog with more effectiveness soon.
Good Luck, and again Kudos to yu for adopting a rescue and be willing to train your dog to make things more happy for everyone.

Exercise
Discipline
Affection

In that order. No "substitutions" allowed.

Listen to Mazer. Please.

I have a chihuahua, (6 lbs) and yes he sometimes is nippy. Jake is 7 years old and has been a wonderful pet. He shares his house with 3 cats and 2 dogs (retriever mixed 40lbs & pit bull pup 35lbs) and he is the dominate animal. He is wonderful with people he knows and when we take him out. Our only problem is when a new person comes into the home. He is not very friendly and takes a long time to warm up to new people. If they try to pet him before hes ready he will nip and growl. Would you consider this aggressive behaviour? His vet said that some small dogs and especially chihuahuas are this way. I never really saw this as a problem, but im rethinking after the above post. What do you think?

Demp,
Do you have two chihuahuas, or is this the same one in your previous post with the subject - Bite ?

mazer-- You are great and can't thank you enough.
summer day-- You are correct I also posted Bite. One dog
chelone-- You bet I will listen to mazer.

Demp,
I agree with listen to mazer. I suspect s/he is a dog trainer or else has loads of experience training dogs. Good luck!