Bloody HELL!
Just got back from pm walk that I do with DS2 and Billy. Billy nearly had a terrier. 
There's a woman who walks two border terriers round that way at about that time. They are always both off the lead and very lively with other dogs. They've also been quite jumpy uppy with my DCs (which is fine because they love dogs and are not scared.)
Billy is on the lead at all times but not muzzled any more as he's been brilliant meeting other dogs who are both on and off the lead. I saw these terriers coming and gave him a loose lead so he felt more confident. One ran up to him and jumped up in his face, barking. So he barked back and sort of pinned her to the ground with his mouth. It took a couple of seconds for all this to happen.
I yanked him back, shouting 'Billy, NO' or something equally useless and the dog ran off- by this time the owner was reasonably close. Both dogs approached him again, barking, then one started to jump up at DS2 (who thought it was very funny.) They kept running up but by this time I was holding Billy by the collar with one hand, with the other around his chest to stop him lunging again. He was shaking.
I apologised to the owner and she seemed OK, as did the terrier. She said her dog should learn not to approach him. We walked fast in opposite directions.
I don't want to muzzle him - he was doing perfectly well without it, even walking and hanging out with a Jack Russell on one walk and the odd Staffy. But maybe I should. I feel terrible, like I am in the wrong because of his reaction and that he should be muzzled on our walks in case of this happening again.
I just don't know what to do for the best. 