I think you are being a tad over sensitive but then aren't we all when it comes to our beloved pets.
I would not call the lady stupid either, but perhaps she should have thought before she spoke, she could have said something like oh what a cute dog, is he friendly to strangers? i think it is all about the approach really, so i get why you felt annoyed.

Although i have to say down under the ONLY reports i have ever seen about dog attacks have mostly been pit bulls, so i think the Media has a big responsibility here in how they are portrayed, it makes people even myself wary of them.