Speaking from the other side of things, my friend's dog got killed by a car recently. It was wearing a quick-release "safety" collar. She was holding the leash, the dog got excited by a car, the collar broke off, and the dog went running. I guess I'm saying that not ALL dog incidents are due to some turdball lazy owner neglecting their pet, or siccing it on cyclists because they hate our guts. Maybe they just have faulty judgment about how well their dogs are trained (or their equipment). Surprise, splat.
I think with the little dog in OP, whatever you do, you're gonna be branded as the cyclist who tried to kill her dog. Oh well, some stranger hates you. Meh. If they keep their dog off the street in case Mr. Meanpanties comes back, in the end the dog's safe and (almost) everybody wins.