Wow, well, this is like reliving what happened to me roughly three years ago. My bully Truman's hip popped out of socket, just like Baxter's, and he was diagnosed with severel hip dysplasia. I will link to the article I wrote on hip dysplasis
here. It includes Truman's x-ray and a photo of the way he sat. I was advised to humanely euthanize him by two vets however, I went to an orthopedic surgeon, who helped us. He had surgery to put his hip back in socket and JPS surgery, which fused his public bone to cause his hips to grow in more tightly. I am happy to report that Truman is a happy, healthy 3 year old bully with full mobility.
You are doing the right thing by taking Baxter to an orthopedic surgeon. They will be able to tell you much more and give you a prognosis. I know it stinks but catching it early is really a blessing, because once the arthritis sets in, there's no turning back.
I would also contact the breeder and let him know how severe Baxter's hips are. He might not do anything (our breeder, according to contract, offered to take Truman back to euthanize him and give us a new puppy - of course we refused) but you can at least make some demands and see what happens. I received my money back for Truman with the agreement I was responsible for all his future care and, in the case he was suffering, I would euthanize him.
Please feel free to contact me or post any more specific questions and concerns! Thinking of you guys! xo