Sorry, my post didn't contribute much and was more as a rant...I just look at situations like what you described (if she was actually afraid) as an opportunity to educate and try and un-sully the GSD name. I would have said something like, "oh he's really friendly. I have children in my family, he is best buds with them...German Shepherds aren't crazy biting machines, and neither is he." I used to do this at the park all the time.
I had a rottie with me one time at the park, and a little girl (7/8 years old) came over and asked if the dog was friendly. I said, "absolutely, you can pet her if you like." She sat there for ten minutes petting the dog. Afterwords she said, "ya know...everyone says these kinds of dogs are really REALLY mean....I guess they are really REALLY wrong!!" I told her she should always ask permission to pet any dog, like she did....and it made my day. I don't want people to think the breed is some manic biting crazed nutcase....That's how breed bans and housing banned breed lists come to fruition. I hate it when people tend to bask in the glow of people being terrified of their (fill in the blank) dog....pitbull, rottie, dobie, GSD....it does a dis-service to the breed...and your OP drips with sarcasm, pride, and even the thought of going back and "earning" that look....gross OP....gross....
"An excess of size is an unserviceable feature for breeding, his powers of endurance, his speed and the smartness of his movements suffer in all circumstances. Giants are never nimble."-Creator of GSD