This dog was clearly in a stressed state, and displaying territorial aggression. As Pat Miller said, any dog will bite if you push it hard enough, and when it will bite simply depends on the particular dog's bite threshold and how stressed it is at that time. In my experience, dogs on the loose (particularly those who got out accidentally, and hardly ever see the other side of the fence) tend to be in an extremely stressed state. When I see a loose dogs with my own dogs in tow, I try to get away as quickly as possible. I was bitten myself once by a stray GSP cross as I picked up my bichon puppy to protect it, and again by a Border Collie on the loose, when I went to the door to alert the owners that it had escaped.
If you add to that little socialisation by ignorant owners, a dog breed more likely to be aggressive, and a squealing child, and you get the disaster that happened in Melbourne recently, when a 4-year-old was killed by a roaming pit-bull cross. Most media reports seemed to imply that the dog simply waltzed into the living room and proceeded to viciously attack all people present. There was only one report I found that clarified that the child came running into the house with the dog in hot pursuit. It's easy to imagine what happened: the dog escaped what was probably constant confinement in the backyard, hyped up he spots a child, heads towards it, the child understandably starts squealing at the sight of the approaching dog. This revs the dog up even more, he now starts charging at the child, the child starts running, the dog's prey drive kicks in and complete disaster follows.
They may be able to ban the breed, but as long as people with no idea of how to properly treat a dog keep having dogs, it's just a matter of time before the next incident, with a different breed.
And whilst a poodle cross might not end up inflicting this kind of damage, they sure can bite. And even they get revved up when faced with a squealing child.
So if there's anything that can be done about reducing the incidents of dog bites, it is by education. Education of dog owners about humane training and treatment of their dog, and education of the general public about dogs' behaviour, and how to interact with them safely. I find that there is a near complete lack of understanding nowadays - paired with increasing intolerance of dogs' natural drives - of how to approach an unfamiliar dog, and how to discourage a dog from approaching. Councils and schools could provide at least some basic information.
Yes, I am "scared" of stray dogs - so I can help them if need be, while keeping myself, my dogs and my kids safe.