I think asking them if you can take him running with you would be great. You can even say, "I've seen your dog, and I know I'd feel safer running with a dog beside me. I bet he'd have fun, too. Would it be okay with you?" Plead your honest shyness as a reason, and they'll have to believe you.

I think that would be more likely to work than "I feel sorry for that poor dog" so they don't need to get all defensive.

And if they have half a heart, they'll take pity on you, even if they don't pity their dog. How could they resist?

Personally, I would have called Animal Control, but it's a hard case to prove, if he LOOKS healthy. But know how much labs loooooove to be with people, and so even if they're housing and feeding him, it's still abuse from my point of view.