It certainly sounds like your actual daytime encounter wandered into your dreams. I hate that when phones ring when I'm sleeping (real or imaginary :-) I know from experience and reading about dreams that falling asleep while watching TV can make for weird dreams too.

We are supposed to be all the people in our dreams, since they are our dreams and creations from our imagination and I was struck by the person to the side not doing much to get the ugly snarler off you; it made me think it was you during the weird encounter with your friend on the street, wishing you had "done" something rather than just having stood there and taken it.