Adoremydogs has got the concept, eye contact from a stranger the dog already perceives as threatening will heighten his anxiety. Get your "stranger" to openly show the treat, on the palm of the hand with the fingers facing slighty downwards, but not reach out to the dog. If the dog is a little hesitant to take the treat point it out to him and encourage him to take it. (He must be sitting calmly before the treat is offered.)
It's interesting that you say he calms as soon as you speak to someone. If you don't mind looking strange try walking along and saying, "Good morning" to everyone that passes. The dog will then understand that you see others as no threat to you or him and hill begin to respond in the same way. You will also be suprised how many people respond in a positive way to you! Remember to appear as relaxed as possible and for the record - you are doing a great job - keep it up.

Zorro may look wherever he likes at these meetings, you must ignore Zorro as much as is practicable and concentrate on the stranger and the stranger should only look at you.