I have a double take on what you are describing:
First of all, my problem is with the out of control people who don't take their dogs, get working breeds, have no skill to raise them or train them, which results in thousands of dogs being put down every month across the country. I have no problem with the dogs. The dogs will do as little or as much as expected from them. It's a shame that such breeds as pitbulls and rottweilers attract irresponsible owners, which translates in bad reputation for the dogs.
On the second hand, all you are describing is the aftermath, no one know what actually took place. What exactly did the pitbull do to the little dog or its owner? I'm assuming if you knew, you would have mentioned it in your question. If you saw someone hurt, you would have mentioned it in your question. So I have to assume that no one was hurt, and you saw a woman with a little dog crying. Okay, aaaand? You realize that if a pitbull wanted to hurt the dog, it would have, especially if the owner "was doing nothing"? Sounds like the owner of the little dog was scared and so were you. Was it because the other dog did something, or because you have a certain formed opinion about pit bulls?
I take my rottweiler for a walk, religiously. In our neighborhood, we usually pass by at least 10-15 dogs left outside in their yards with electric fences. Most of the dogs are labs, a few mutts, etc. The vast majority barks their heads off when we go by. My rottie doesn't say a boo. Day after day, every walk! The other day a loud mailbox startled my dog, and she barked with a full blown rottie volume, and it's quite a bit. You'd think a bomb went off. The lady who was checking her mail ran for the house, as if my dog was out of control. Did I mention that her two labs bark at us all.the.time. when we are walking?
The moral of the story: prejudice colors perspective.
I don't know what else to say on the matter. Either that poor pitty has an irresponsible, unskilled owner (shame on them for not educating themselves on the needs of a dog), OR nothing actually happened, and this is a non-incident being blow out of proportion based upon the underserved reputation of the breed.
My 2 cents.