Well done you !!!
her acting like that is likely to be the cause of future problems....she needs to chill out, and stop being a bully.

Your dog sounds like my Max. He is very freindly, ii have had similar problems, max even got into a fight with a dog, that should have been muzzeled, and not allowed off the lead.

My view, if the owner can not control the dog, or the dog is a danger to others it should be kept on a lead and muzzeled, and given some training.