I was confused by the original post at first. At first it sounded like you were on a walk in the neighborhood and your dog was off lead. Then it sounded like you were in a park area. I assume it was a dog park since other dogs were off lead also.

I'm going to address this as if the dogs were in a dog park because if they were on a neighborhood street neither of the dogs should of been off leash.

In a dog park environment, you need to understand that not everyone who goes to a dog park has a trained dog that will listen in an excited environment to a recall (even if they do at home). Unfortunately, you have to expect that as the norm and not the unusual. Unless there is a lot of room to make sure you can get your dog on leash before another dog comes near, you must keep it on lead for YOUR dogs safety. While it doesn't sound like your dog is truly an aggressive dog, she does have fear issues around other dogs and 90% of all dog bites occur out of fear.

When I take my Dusty to the dog park, I am always on guard because as loving and friendly as he is with people, he is very territorial over his frisbee when another dog tries to play with it. For that reason, I never participate in community dog play at the park with him. I go there strictly for walking him on trails that are not frequented too much and I always put him on leash if another dog comes near until I know they are not frisbee nuts too. That is Dusty's only issue. I can go to the park without his frisbee and he would be fine but he enjoys it so I'd rather be on it gives him great joy to chase it at the park and I have a hard time However, I usually do take it because it's great exercise for him and it give him great joy. I'm just always on guard.

With your dog, you will also need to be on guard. Not so much for your dogs inability to listen but for other dogs who visit the park that do not listen. I tend to lean on the side of better safe than sorry.