Hi. I'm Dr. Gotthelf. I have been a vet for 35 years and I would like to use my experience to help you with your pet's medical problem.
It sounds like you have been through the war with Marley. Your question is about the long term effects of steroids. At the low doses that you are using, there probably will not be any permanent damage. Giving steroids is like drinking wine. A little each day is OK, but a bottle a day can be very harmful. The problem I have with prednisone is that it is in and out so fast that the dog's skin never really gets a chance to completely calm down. When I need steroids, I prefer dexamethasone as an initial injection and then a small amount in tablet form as a follow up. Dexamethasone is 5X as anti-inflammatory and it lasts longer. In addition, it does not cause the dog to drink as much water.
OTher suggestions that I can offer to help with itching include a dip in an insecicide for sarcoptic mites. Either phosmet or amitraz are recommended for that. Many times parasites cause these chronic skin problems. I like to dip these dogs to rule out mange mites.
Another drug that is very helpful is Atopica, which is cyclosporine. This drug is not harmful as an anti-inflammatory, like steroids, but it does cost more. It works as well as steroids. To decrease the cost, I use a herapeutic dose of an antifungal drug called ketoconazole, which cuts the dose of Atopica in half.
There is a new drug that should be released in the next month or so called oclacitinib made by Pfizer. This drug stops the sensation of itching that goes from the skin to the brain. It seems to be very effective in stopping the itching. Ask your vet or your Dermatology specialist about this drug.