Please take a read from my blog below. Hopefully can shed some light on the some of the deadly outcomes of Xylitol. Not trying to be dramatic, but Xylitol is safe for human consumption and people with diabetes, but not for your pets. Please read if you have pets!
http://www.trainedbyinsulin.com/1/post/2012/12/deadly-sugar-substitute-xylitol.html
Have you checked why Penny has such horrible breath ? My dog is a shelter dog who will eat just about anything, but we feed him raw bones and meat and his breath and teeth are both terrific. While some vets who are taught nutrition by the Purina company will argue about raw feeding, many are beginning to realize dogs are designed to be carnivores and do not process grains well at all. My dog is my second son and he is incredibly healthy and vital in large part to being fed what he is designed to eat.
Clare - that is great to hear you got a shelter dog, Penny was a shelter dog too. She is getting older, almost 10, but very small dog. We have switched both our dogs over to grain free dog food as well. I think the primary reason for her bad breath is she has OCD when it comes to licking, I mean she will lick the floor, your pants, your face, her blankets, pretty much anything! Also, with her old age, her teeth are not in good shape. Totally agree on diet though. Being diabetic I try to eat the same way, grain free, doesnt always happen, but try to stick to the 80/20 rule. Eat as best I can 80% of the time :) thanks for the comment.