No, they didn’t need probable cause. They only need an “articulable suspicion” for a stop and a pat-down. They may well have had enough for probable cause even for a more thorough search here, it is hard to say.
When responding to a shots fired call in the vicinity, they likely have an articulable suspicion to stop anyone they see in that vicinity. How exactly would you have the cops respond to a shots fired call at your house? If they pull up and see a suspicious person standing on the sidewalk, should they stop him and ask him what he is doing, or just tell you tough luck?
In this case, the officers believed he had a gun. It is hard to tell from how the article is phrased, but that might be because he had his hand in his shirt. Easy case for articulable suspicion - a good stop.
In any event, he did have a gun, and pulled it out. He chose poorly.
The police story does not hang together at all.
If the deceased had in fact recently fired his gun, then the police dog was able to smell the residue and may have in fact alerted his handler to it.