The whole situation is upside down and bass-ackwards. There is no logic in it, and there is NEVER going to be a way to approach this system logically. They HAVE harmed your son, but he has also harmed himself. He could have been making different choices all along the way.
This is just a hunch, but I think there is a LOT more behind the court's attitude than "just" GAL and PO bad-mouthing you. I honestly think your difficult child saw them bad mouth you and saw himself get away with a LOT more because what they said. He is a smart and manipulative kid. I think difficult child told some HUGE lies about you, first to GAL and PO, then to everyone else he has dealt with. INCLUDING the his lawyer. I think that his lies are a large part of what is behind the court's attitude.
The system has NO common sense or logic. They will cling to a lie that lets them not invest resources before they will believe anything that would lead to a placement or therapy that cost money to provide. It is being penny-wise and pound foolish. Teaching a teen to LIKE juvie and really, what wasn't to like? He tried pot in there, hung out with kids who were not good influences, had NO adult looking at him with disappointment on a daily basis, and got to hear a LOT of other idiot kids say that they can do exactly what he wants to do after they are released. He didn't have to see how hurt you are, how much his awful choices have cost YOU and him, how he has bankrupted you, etc...
THEY taught him to LIKE juvie. Now he seems to want that to be his life. I hope and pray that something, somewhere gets through to him. I would not feel real comfortable with him in the house, esp as I strongly believe he heard the lies and not only didn't tell anyone that they were lies, he built on them and kept them alive. The court officials don't know their head from the latrine and they have bought his lies hook, line, and sinker.
At least he is big enough and likely strong enough to fight your bro off if he ends up there.
K, from here on out, whatever happens is on him. His choices, his lies,etc... I don't have advice or ideas cause I am sure any i come up with won't work. But I AM sorry it has come to this.
Hugs.