Bottom line is that if the owner never opens the porta-kennel in the cabin, you never have an incident or a dog bite.
I don't see much need for other analysis/explanation of this incident. The kind of people who bring Tippy into the cabin are gonna have the dog's vaccination up to date as the animal is clearly a beloved member of the family. So it's all about the owner plain and simple. I'm a dog lover myself, but I'm also savvy enough to know that any dog can get testy, especially some of those smaller breeds when placed in a stress environment. So I would not want to cuddle up with Tippy & I would not be happy with an owner who elects to let him explore his airline environs.
This incident does however underscore the delicate balance of things as where does the line exist where Tippy the nippy miniature Scottie with his red ribbon rides in a box beneath the seat for free while the larger & calmer Lassie goes below ( for cold hard cash ) for logical reasons.
Likewise there's the issue of working dogs for the blind which are most always of the larger variety ( and whose behavior/demeanor tried and tested for public interactions ). I've yet to encounter one of these in the cabin. then again, these animals rarely make trouble.
On the horizon is a growing issue of "companion animals" which does not limit itself to a dog or cat but can range from rabbits to ( presumably ) ocelots, turtles, or pigs

. In this "feel good " and " Life is all about me" society in which we live today, folks can pull a doctors note out of their pocket which proclaims Flicka an inseperable travel companion who sets their life straight & steady and must be given hotel accomodations with their afflicted, suffering owner. I kid you not -- a Marriott GM tells me that they're reviewing policy and procedure in the hotels for the day that these folks start showing up at the desk with a variety of companion animals which reach beyond Tippy or Kitty. Some states are already working on statues for these folks.
Not saying that we're gonna see kangaroos in coach, but keep your eyes open at hotels in those parts of the country which are inclined to this sort of mandate craziness. The airlines have it easy.
Barry