It might look scary, but I'm pretty sure Cagney was snarling at the puppy and not the lady... especially if he's never done that before. Gonzo has done it before, and its embarassing and I apologize but there is a lot in dog body language that we dont' see or understand.

Most of the time when we approach another person and dog and talk to them, the dogs sniff each other, then go to check out the people. Either the puppy could've been jumping on Cagney and he was just warning him, or the puppy could've been tense when another dog greeted his human and Cagney might have sensed that. When we're out, I have to make Gonzo sit and wait when I say hi to a dog, because I know if a dog jumps on me and Gonzo is in between us he will get super-snarky at them. He's also greeted dog owners before and their dog got really pushy, so he growled at the dog but the owner thought he was growling at them. You just have to read your dog and make sure you correct them, or don't put them into a situation where they feel cornered or threatened. Just because Cagney was excited about meeting the puppy doesn't mean he wanted to play with the puppy, or he would tolerate the puppy jumping all over him.

Cagney could've also been snarling at the lady because he felt his space was being invaded. Most dogs, especially small pups, hate it when people bend right over them and pat their head. It's threatening and can suprise some dogs and cause them to snarl, even if they don't really mean it. Solve that by asking people to kneel in front of (NOT over) Cagney and pet him on the chin, shoulder, or side of his head