When your dog is whining, helping and biting the air she's stressed beyond what she can handle! Correction won't help, and is inappropriate. To help her get over this, I would recommend desensitization. Start by taking her close to these barky dogs, but stop before she's showing stress. Have her sit, praise and treat her calmness. If she's not calm, you're to close. Slowly over time you move closer and closer, always treating and praising her for being calm. Just watch her closely, lip licking is another sign of stress, so if she's showing that or the other behaviors you mentioned, you're moving too fast! It can take months, depending on the dog. I did this with a 2 1/2 yr old female, and it worked beautifully. Within a couple of months we were able to practice general obedience right next to the yappy dogs, and she totally ignored them.
On the whining when you grab the collar, just don't go anywhere until she sits down and is calm. It won't take her long to get the idea.
To get your dog to listen better to your wife have her do some obedience training with the dog. It'll help if she does it correctly, meaning consistent, firm and fair. Don't repeat commands. Do make the training fun.
If done correctly it'll help. If she's unable or unsure how to do it, work with a balanced trainer.
It's not the size of the dog in the fight, it's the size of the fight in the dog. Mark Twain