The issue may not have been that the cyclist was afraid of a bite. He may have been afraid of crashing into your dog - if not this time, then the next time he rides by. I state this because I was involved in a similar situation. In my case the dog was large, but my concern was more with crashing (and the subsequent biting) into the dog.
I was humming down a 2 lane road when this dog appeared out from behind a row of bushes. There was no opportunity to stop, only to brake and swerve. Unfortunately for me, there were 3 cars comming @ me in the other lane - so swerving wasn't much of an option. I ended up, through either luck or divine intervention, slipping between the dog and the oncoming cars.
I had HALT with me, but there was no opportunity to use it. However, I always ride very slow by the house (I also visited the dog owner the evening of the incident) now, and have my HALT ready.
I do understand your feeling as your dogs are so small. However, in my case, the size of the dog wasn't the primary issue. I can most likely survive a dog bite, but I certainly wasn't going to survive a head-on crash with a motor vehicle.