Really depends. You don't necessarily want to drop your leash because if your dog bolts and the other pursues you can't help your dog in the fight as easily. You want to give your dog as much of the leash as you can. You also want to go on offense before your dog has the chance to. When I was faced with the situation I basically did exactly what your plan was. My dog managed to throw his collar but stuck around because he saw me in the fight and decided to help.