Many dogs wag their tails while fighting. Wagging tails aren't exclusive to a friendly dog. Wagging tails can be excitement or arousal or other things.
I am not sure when you say the woman spoke of the ridge on your dog's back whether you mean a ridge like in a Rhodesian Ridgeback or do you mean your dog's hair was raised?
Personally, I don't own a small breed dog. My dogs won't hurt it...deliberately, but stepping on one or tripping over one can have severe, negative consequences. The woman was rightfully concerned about her dog's health and welfare if your dog were to get loose.
I don't view the woman's comments as judgmental. I see them as being protective and concerned for her small breed dog in the face of potential danger. She doesn't need to know your dog. She just needs to know what a large breed dog is capable of doing to a small breed dog, intentional or not. She is entitled to assess the risk factor based on the negative experiences of others and little dogs do suffer much from the bad behavior of larger breed dogs. It is no accident that dog parks have separate areas for large breed dogs and small breed dogs. It was based on actual statistics of the dangers of small breed dogs running together with large breed dogs.
Perhaps the stern looks on the faces of people with little yapping, out of control dogs is all about their own dog's bad behavior and not the presence of your dog.
If you need equipment to maintain control of your dog, understand you’re hanging on to your dog’s body because you’ve lost his mind!