HELP ME PLEASE my dog and her aggression towards neighborhood dogs?

My dog is a cairn terrier like from the wizard of oz. She's pretty yappy but very friendly to people. It's dogs she's not. Some dogs she is nice to but they get annoyed by her and all her jumping up and around them in their face. She's had a few doggie friends. But we've also come across quiet a few when its quite the opposite. There wagging their tail and such and she's yapping and growling. One she actually got in a fight with, but he was double her size and she was the one that started it. Well, even though nobody got hurt and their was no legal trouble (haha), we came across him again (its an australian shepard), its an off the leash dog and the owner is elderly. Our dog is always on a leash and harness unless she accidently gets loose which we are always running after her then (thats how she had got in a fight with the australian shepard-they both were off leash and my dog got loose) Anyway, today, our dog was on a leash and harness and we came across the off leash dog. It happily started wagging its tail and came to sniff her. But i knew how she would react and quickly picked her up before it got to close. The thing is, its really embarrassing. It's annoying that the australian shepard is off leash because that would help everybody. It would be no big deal if they came across each other because they both would be restrained but at the same time i understand why, he's an elderly man and rides a golf cart so the dog can get exercise. If he was restrained it could get under the golf cart or something as it walked. Any ideas on how to calm the agression towards this one dog? Thanks and sorry it was so long.