Gypsy, be very careful in a situation like that. A small animal can be seen as prey in a lot of cases, and I think what you did was right. I probably would have called the police afterwards, as well, given the owner's attitude.

When we brought our newborn daughter home, my otherwise friendly and well-socialized terrier made it clear he thought she was for him. We had a few little talks, one of which involved throwing him about ten feet across the room when he made a threatening move toward her (actually, he behaved as he would have if I had come too near his food, which rather unnerved me). He was the best dog I ever had and I loved him, but I never left him alone with my kid until she was bigger than he was.