First thing you and the other owner need to do is reassure each other of the rabies vaccination status of your dogs.
Sorry, but since the GSD did not leave it's own yard it seems to me that you are responsible for the encounter. It seems to me that you had no more control over your dog than the GSD owner did over his dog. I think it would be nice if the GSD owner offered to help with expenses, it was your smaller dog that got hurt after all, but I cannot see why they should have to and I don't see it being half their fault.
I can see this really backfiring on you if you report them. You knew how your dog acted, you knew the GSD didn't like your dog yet still you allowed your dog out loose and out of control. You both had your dogs loose in your own front yards and your dog was the trespasser, not the GSD.
To help with future GSD encounters, not with that one, can you find a nice friendly GSD? Arrange a playdate? Or some other large breed dog?
Sorry to be negative. I do hope your dog is OK and not traumatized by this. Dogs are pretty resilient. Maybe he learned an important lesson on how to properly approach other dogs?
It was hard to read this without paragraphs to break it up. I hope I got it right. Please take pity on those of us who have a hard time with a big jumble of words.
