YANBU to be angry...
However if you show that at the time, you are reinforcing your childs belief that there is something to fear, because you being angry is scary for a kid.
So the best thing to do is remove your child from the situation swiftly with as little fuss as possible.
If you are going to take a child who has a fear of dogs, to places where there will be dogs, then you should take sensible steps to reducing their fear (and learning how to handle utter idiots calmly is part of that).
There are dog trainers who will allow parents to bring a child to puppy classes and set them up a safe area where they can observe for a short time each week.
Unfortunately in the moment, there really isn't anything you can do other than walk away, because any anger or any unpleasant interaction is only going to make the situation more stressful which your child will pick up on.
Having said all the above, I would WANT to say 'are you unable to read as well as unable to train your dog? whilst pointing at the signs.
An alternative would be 'my child only likes dogs who are extremely well trained' and when they claim theirs is, ask them to demonstrate a close competition heel 100 yards in the other direction :)