A friend of mine took a Westie I picked up on the side of the road and flew back across the country with her. As you say it is a tight fit for a Westie in an approved under-the-seat sized kennel.. Spend some time working with your dog prior to the flight, slowly increasing the length of time he spends in the kennel. Make it a good experience! Lots of little treats. I gave my friend one of those rolls of pet food you see at the checkout area at Petco and she broke pieces off of it and gave it to the dog periodically.
The only problem she ran into was security making her take the dog out of the kennel during screening. She was concerned about getting her back in, but we had spent enough time with the dog and treats that she practically flew back into the kennel when it was opened up. 
I used to work for the airlines, and I agree with your husband. I would never send a pet of mine (or recommend it to anyone else) via the cargo option.
Every airlines website has posted rules and regulations for pet travel. Some have limits on the number/type in the cabin, some require paperwork from your vet, etc. You definitely want to check the appropriate airlines website before going to the airport!
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