In the middle of our game, one of the Deans appeared with her toy poodle on a flexi-lead. She blithely let him toddle right over to us, despite my saying, "My dog tends to be too exuberant for most small dogs." Sure enough, he stared and started to get wound up (pulling forward, stiffening, bending his front elbows a bit in preparation for bouncing) and the little dog gave him some fearsome bared teeth. I moved him away, which (of course) made him start barking. Once we'd gotten about 15' away, though, I pulled out the toy - and he actually played with me! It was pretty amazing.
After he lost interest in playing with the toy, we went for a brief walk. We ran into one of my dog-loving coworkers, an older man. He came up and tried to greet Albee by leaning over and reaching toward him, which made Albee tuck his tail and dart backwards. I let Albee eat treats out of my hand, then put some treats in my colleague's hand and let Albee eat them out of there. Albee allowed the guy to pet him while I fed him treats, although his tail stayed droopy.
When my colleague stopped petting him, I asked Albee to "go touch," a behavior I taught him over Easter weekend when he was acting skittish around my dad. He rapidly learned that he could approach, nose-touch the scary person, and then turn to me for a treat. As soon as I asked him to play this game, Albee's tail flew back up into the air and started wagging. He loved it! (My colleague thought it was a hoot, too.) My colleague even did some more petting of Albee, and his tail stayed in the air. Huzzah!
I like the "go touch" behavior better than having the stranger feed the nervous dog because I think luring can lead a dog to get closer than they're actually comfortable. Once they realize they've gotten too close to the scary person, they get scared and either flee or try to get the person to back off. By shaping the dog the choice to get close without using a food lure, the dog is fully cognizant of what he's doing and is constantly making the choice to go closer on his own in order to earn the reward.
One of the things my KPA instructor, Carolyn Barney, said quite a bit is "Don't lure fear." At first I thought, "That's weird." But I'm now in full agreement with her statement. Better to let the dog make the choice as he's comfortable doing so than to put him in an uncomfortable position.