Think you did the right thing! The lady clearly had no control so the dog didn't respect her. It laid down for you because it clearly respected you after that. Dogs can take much harder hits when playing with each other. I think you were completely justified in defending your puppy and if someone else doesn't like it really is their problem. I would do the same thing for my dog or my kid and if the owner has issue with it then we can fix that too.... this is why I don't go near dog parks or areas with loose dogs unless we know them well.