Frustration, or aggression?

I'd bet that is frusteration. I see a lot of this a local dog beach we haev where it is ok to let your dogs off leash which most do. Everyonce ine  awhile someone will bring their dog with the leash on and you can just see the frantic craze in the dogs eyes.
In one of my many dog classes I've taken with Rory (for potentially agrressive dogs) they say that if anotehr dog ever comes rushing aggressivley at your dog who is on a leash it is reccomended you take your dog off. I know this sounds totally crazy but it is meant ONLY if your are %100 sure this dog is going to attack yours. The reasoning behind this is that your dog will try to appear more aggressive because he is ina vulnerable position and he is trying to display his power to scare off the otehr dog which can then be interrpreted by the other dog as defintly wanting a fight. If Rory and I are walking on the beach where there is a leash law and another big dog that isnt onbeying the law (pit,dobie, rott) comes running up off leash I feel her tense and not in the exciting way she usually does. I yell to the owner to call their dog back, pint out the dog is supposed to be on a leash or I'll have to let her go to. If a dog attacked Rory while she was on leash it would get me tangeled, ti would eb harder to pull the dogs apart and it would leave her more aggressive since she has to compensate for being constricted.
We run into this problem at the areas where you are supposed to have a dog on a leash. The people who let there dogs off leash at a place like that are afraid to take their dogs to the dog park becasue of confrontation. So they go to the less populated places, wait until nobody is around and then let them off  leash so then can still run and play which is when Rory and I encounter them. Generally people know if there dog is goingto behave at a off leash area.....generally, ha ha

it is reccomended you take your dog off

 
We tried letting him off during a snarling match with said shiba inu (thinking that maybe he would calm down if they were allowed to sniff, etc), and they ended up scrapping for about a minute, with Cyrus getting the short end of the stick.
 
Is there any "proper" way to do the whole 'unleashing' thing?

Well I was only directed to take Rory off leash if I felt there was going to be a fight so as not to entangle her and leave her defensless. I'm not sure that applies t your situation though but I was trying to show how it can make them feel more vulnerable.
It really seems to me as if she is not aggressive yet, just frusterated while on the leash and i see your dilema is that you dont want her frusteration to turn to aggression. Is that correct?
When Rory was a pup she used to whine, cry, and pull at her leash to get to see the other dogs, all in friendliness though and it took a while for her to be trained to not make such a commotion.
I would keep a eye out to spot a potential issue hopefully before she did adn I would immediatly make her sit adn stay. I would kneel down behind her and keep repeating sit and stay, sometimes distracting her with treats from my pocket. After the other dog had passed us I would then continue our walk. Be sure to tell her firmly because any hint of consolation will make her think you are praising her for her actions, make sure she knows you mean business.
Did you also mention that once you actually get to the dog then she seems fine? If so it took me a while to realize that a lot of the times Rory just wanted to say Hi and she calmed down after a couple of nose kisses. Other good dog people will say "oh she's just a pup"! and have a rememberance of when there dog was like that too. Maybe ask them, "is it okay if she says hi real fast"?
A quick hello is good because any longer and you'll get tangeled and the other owner aggrivated, ha ha!
This does not work however when you are in a store, balancing a dog, toys, and a 50lb bag of dog food. In those extreme cases before she grew obediant I would literally have to straddler her betwenn my legs and hold her there (she was a big pup).
Obviously this is going to work a lot better if your pup knows the sit and stay commands adn I also noticed that the more dogs Rory gets to play with the less excited she becomes when she see's more. Socialization is the key!