Dog training suggestions or I'm getting rid of her? (long)?

I have a year old queensland heeler/australian shepard mix. I love her but she's destroying everything when we aren't home. We never leave her home alone for more than a couple hours and we have two cats that are like her best friends. But when we leave her she immediately starts chewing everything up and destroying everything in site. Earlier this year we tried leaving her outside instead of inside and she destroyed the siding on the house and our screen door. She's kennel trained so she's usually in her kennel when she's inside but she chews up her mats and blankets we put in there for her. I'm at my wits end. We're in a rental and I don't want to get rid of her but I'm not seeing any alternative. Any suggestions before I go nuts and give her away?

Answer:

I agree with all of the posters who say your dog definitely needs more exercise, but you need to combine this with conditioning. Your dog suffers from separation anxiety and training will go a long way toward fixing this.

You basically need to get her to realize that you leaving is not a bad or permanent thing. This means you need to do things that look like your getting ready to leave, then watch tv or eat a meal after getting ready. If you do this over and over, your dog will eventually learn to not freak out when you're putting your jacket on, grabbing keys, etc.

Next step is opening the door and closing it without leaving. Do this a few times and couple it with treats and praise. Then open the door, walk out, close it for a second, walk back in. Repeat with treats and praise. Gradually increase the amount of time you spend on the other side of the door, so that your dog learns that you leaving isn't all bad and scary. It may take a few weeks to see drastic improvements, but until then, try not to leave her home alone. Coordinate your schedules so that someone is always home, or bring her to a doggy day-care if you have no other options.

http://www.aspca.org/pet-care/dog-care/overcoming-separation-anxiety.html
http://ezinearticles.com/?Dog-Separation-Anxiety-and-the-Training-to-Overcome-it&id=1450313
http://www.yext.com/vets/articles/separation-anxiety-in-dogs.html

EDIT:
Just read your latest edit. If this is the case, then you are definitely dealing with separation anxiety. You may want to read a bit about the difference between work and play. When dogs are playing, they get a bit physically tired, but mentally revved up. When dogs are working or focusing on a task they get physically and mentally tired and have less energy to be destructive. This means when you are on walks, the dog is heeling (NO FLEXI LEASHES!!!!) and focused on you. Get a backpack for the dog and put two water bottles in it. This way the dog will feel like it has a purpose besides walking and it will tire the dog faster.

Find a trainer in your area who specializes in dealing with this. You definitely need to condition the dog to being alone. It will take dedication and work and time, but in the end you'll be happy you did it instead of dumping the dog like it's garbage.