You might also have to use the "jackpot treat" at first. Is there a specific treat that he goes absolutely bezerk over? If there is - save it for those times when you want him to focus on you and not another dog. You need to start with something that he likes better than anything else.

I would also take it in smaller steps. Start with getting him to focus on you when there is a dog a block away (using jackpot treats) - then when he is good at that, do the focus exercises when another dog is a little closer, etc. Don't go too fast - make sure he is 100% trained at a block away before you move closer.

If he does a good job of focusing on you, then let him play with the other dog. Eventually he will learn that being calm and polite will get him what he wants.