The owner should be cited for her trouble.
As a former LEO, and without some evidence of extenuating circumstances, I would say the officer was out of line.
While OC spray doesn't affect all dogs, it does deter most.
A witness to the shooting (Mercer) who is not a former owner of the dog corroborates the dog owners' accounts.
Unless the shooting officer can articulate why he feared for his life when a non-growling non-barking dog was deemed a threat to his life, he should be charged with animal cruelty and dismissed.