In my experience, there is a very clear distinction between play and aggression. When a dog is in aggression mode, it is out to damage and it won't stop until 1) the dogs are somehow pulled apart from each other or 2) damage has been done. When an aggressive dog has hit that mental stage, there is no turning back until there is a forced, physical separation between the two dogs. Play CAN be agitated and it CAN turn into a scuffle. But if both dogs are voluntarily stopping and starting interactions, then they are not being aggressive.

The thing about leash reactive dogs is that they can learn to interact nicely with dogs they are familiar with. When taught coping skills, leash reactive dogs can be calmed down to a level so that they can stay within very short distances of other dogs. Individual dogs have individual thresholds, and it is really difficult to assess exactly how far you can initially push your dog.

A major trigger in leash reactive dogs is calmness. Leash reactive dogs will often NOT react, even when they're on lead, if they're in a calm state of mind. It's almost beyond simple, but when a reactive dog is calm, it is not above threshold and not reacting. Many times, Ivy confused me in the beginning because she would react some days and she wouldn't react other days. I quickly realized that, in the face of environmental stressors (i.e. me asking for behaviors, new places, new people, etc.), she would react. In situations where she was either physically or mentally exhausted, she would not react because she was, essentially, calm and tired. I think if Chloe were in her own familiar territory and Bobbie is a familiar friend, Chloe could actually be very calm and not prone to react. Just how I think things are playing in Chloe's head She sounds extremely similar to Ivy.

ETA: Also, do you think Chloe isn't making a clear distinction between on leash/off leash with the chain? I feel like she doesn't feel like she's being restricted on the chain, which is affecting her behavior (for the better, I suppose).