Best way to handle this?

I propose to make this blog post an interactive one.  In other words, tell me how you would have handled this situation, if you were either party.
Yesterday at the dog park (don't worry, neither of the parts I ask you to play involve channeling your inner Mastiff or Chihuahua), Dave and I were throwing the ball for M.E. (this is a never ending job---one that should require a salary), and watching Rudy and L.N. sniff the rear ends of other dogs.  There were several other dogs in the park, including a big Chocolate Lab, Jake, and a tiny little pug named Papaya.  They love each other. 
Everyone was happy and content until a schnauzer and his master appeared at the gate to the dog park.
The man opened the gate, the schnauzer walked in and was confronted (pummeled, taken down, etc.) by all the other dogs in the park.  Well, M.E. couldn't care less because Dad was throwing the ball for her and our other two don't want to go near the gate because that might mean we are leaving.  The schnauzer did the submissive, roll-on-his-back move when Jake the chocolate Lab decided to take advantage of that stance and get on top of the schnauzer to show his dominance.  Both dogs were growing until the Schnauzer yelped from fear.  The Schnauzer owner kicks the Lab out of the way, picks up his dog and says to the Lab owner, "That dog needs to be on a leash!" The Lab owner lady said, "He never has any problems with other dogs.  Plus this is a dog park for big dogs".  The Schnauzer owner was red-faced and furious and said, "This is a dog park and all dogs should have good manners or shouldn't be here.  THAT dog needs to be on a leash."  "Look", Lab-lady said, "Papaya, the little pug, doesn't have a problem with my dog.  Why should I put him on a leash?"  To which the Schnauzer owner opened the gate and stormed off with a terrified dog in his arms. 
Dave and I analyzed the conflict from every angle and have opinions but I would love to hear some of yours before revealing ours.
What's the right way to handle this? Whata

Happy Communicating!!
Shelly