If his caretakers aren't working with him properly, you're fighting a losing battle. Would they be willing to go to training classes in order to learn to handle him properly? Otherwise, I am not sure what you can do as long as he stays in that situation.
If you are able to have him with you at school, it might be better to take him with you and just work with him a lot at first. If you're worried about him scaring or harming people, you can time your walks for low-traffic times and even put a muzzle on him until he learns not to react to people passing you on the sidewalk.
In the scenario you describe with the woman, I think it would have been better for you to walk away with him,. It isn't going to teach him that people are bad. He won't even be thinking about her most likely, but rather be wondering why you changed direction and focused on following you. It sounds like as you approached her, you were probably tense and expecting him to react, even if you didn't realize it. If so, he picked up on your nerves and if anything, that taught him that there was something frightening about approaching another person. Also, when you're dealing with a reactive dog, it is very important not to let them practice the behavior, as every time they react, it reinforces the behavior. It's very likely that from his perspective, he barked and lunged, and even though you stopped him, he still got the scary person to go away! Nevermind that she was just walking by anyway, he doesn't know that. It sounds like you also maybe should have been more proactive about keeping his focus. Instead of talking to the woman, I probably would have given the dog commands to keep his attention on me. Depending on the dog, this would either be a "watch me" and/or "heel" command as we walked past her, or I would have stopped and put him in a sit combined with focusing commands. If he's paying attention to you, he'll be less likely to react to her.
It sounds to me like a trainer needs to be involved in this situation. Right now, it doesn't sound that bad at all to me. However, it will likely escalate if it isn't addressed. He needs consistent training and desensitization in order to learn that new people aren't a threat.
The rowdy dogs:
Hector-2 y/o GSD (mix?) rescue
Scooter-12 y/o ACD/Border Collie mix
Bandit-8 y/o ACD
Wooby-14 y/o ACD, the only other lady!
Last edited by RowdyDogs; 01-08-2013 at 12:19 AM.