I like the pepper spray idea, no chance of you accidentally injuring the attacker but gives you some protection.
I would be really careful about letting my dog go, I understand the logic of letting your dog submit might defuse the situation. But some aggressors are not looking for submission, they're looking for a kill.
I would consider two possible courses, make a friendly visit to the dog owner with your husband and not your dog. See if the situation just got away from him, most people are not lunatics. If that fails, call the cops
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