If the dog is reactive because it is fearful of the other dog and is trying to get it to go away by barking, lunching, sticking its hackles up, etc, then correcting can produce a negative association with dogs and lead to more issues.
If the dog is maturing and becoming territorial on your property, personally, I would give the dog a verbal and possibly a physical correction, Knock that off!!! And, of course, a dog that cannot be trusted off lead, is not off lead. So that correction can be made, and the dog cannot rush into a neighbor and their pooch.
A quick, firm correction and quickly moving on, can be more humane than all the dropping treats, and teaching a dog to focus on you. This is because you are not allowing the dog to become entrenched in a bad habit. It is over in an instance and if it is clear, and strong enough to make a decent impression, without being abusive, then the dog is able to enjoy freedom sooner, the neighbors do not look at him like he is a cross between Hannible and Cujo, and the dog learns a boundary, and that you are in charge of that -- he doesn't have to be.
The problems people have with corrections are almost always more on the human end. If you are squeamish about it, just don't. You won't be able to deal a proper correction with the back up of good leadership. You will deliver an insufficient correction with a background and after math of guilt and apology.
It is not often helpful to liken dogs to children, but in some ways at some stages they are similar. There is a point in a child's development, when it is beneficial for him to view his parent or parents as a strong protector that is always good and right. As children mature, they will learn that their parents are not all powerful, all knowing, and even all good. But dogs do not need to get to that point. For them, even our mistakes, can be all good, if we pull them off with brilliance in the dog's eyes.
With children, we reason with them, and we offer choices. With dogs, it's my way or the highway. Their choices are whether they will chew on the antler or the hoof. They do not need to choose whether or not to bother the lady walking along on the sidewalk with her dog.
Furthermore, the timing of using treats for this sort of thing can also be a problem. If we drop a treat when Frisky starts to notice the other dog and begins his routine, we can actually reinforce the unwanted behaviors, rather than creating an positive association when other dogs are around.
Heidi Ho, Odie
Joy-Joy, Bear Cub, Hepsi-Pepsi
Cujo2, Karma Chameleon
Ramona the Pest, Kojak -- who loves you baby?
Tiny Tinnie, Susie's Uzzi, Kaiah -- The Baby Monster.