I would have handled it the same way... if people ask if they can hold mind I usually respond, "thats not such a good idea, they are really nervous when strangers hold them and they will try and jump." (its the truth) or if it is Armani I will sometimes say "thats not a good idea he might pee" (also not a lie, if he is very nervous he might dribble... I dont want to deal with him peeing on someone).
I am overly cautious now with all these stories of random people picking up strangers dogs and I keep mine on a very short leash or if I am talking to someone or looking at something I will usually have them sit BETWEEN my legs (trust me no normal person is going to reach in between your legs and grab your dog
).