I think you handled that very well. I would have had trouble shooting a dog, as a dog owner myself. I know how attached people are to their dogs, and if my dog is off of her leash, she likes to run up to people to get attention. The problem is that not everybody thinks that her running up to them is as non-threatening as she does, so she doesn't get to walk from the house to the car off-leash anymore.
The hard thing is that to the dog owner, the dog is harmless and just wants to say hello to everybody, but the other person has no way of knowing that, and in some cases the other person may even have a phobia of dogs that makes anything the dog does a "vicious charge toward them". I would be heartbroken if someone shot my dog, so she stays on a leash now. I would have a very hard time shooting someone else's dog, but it doesn't mean I wouldn't.
Anyway, I think you did a good job, and I'm sure showing that extra second of restraint meant the world to that dog's owner.