I have this problem with my GSDx...well, she is just psycho.
She's 11yo, and I've tried just about everything with her. I'm at the point where I can manage it, but she hasn't gotten any better. I walk her with my Rottn Monster, and I do think that he has picked up some of her bad habits, so I think walking your pug separate is a good idea, at least for now. That being said, I really work on him because he is twice her size and just not the breed that I want other people thinking "oh look at that vicious dog, out of control".
After discussing this with my trainer, I've gotten some "tools" to use while out walking, which really are just obedience exercises in a different context.
1) Do formal heeling exercises, making circles and figure 8s so that the dog has to focus on you.
2) Do sits and "watch me" commands. I even step in between so my dog cannot eyeball the other dog, but must focus on me.
3) Sometimes, we'll pass fenced yards where the fence is right up against the sidewalk, and the dog in the yard comes right up to the fence. I'm taken by surprise every once in a while, and both my dogs have been known to react like idiots on occasions such as this. I VERY STRONGLY give a leash pop, and sometimes more than one. Now I'm talking VERY STRONGLY because the situation warrants it and a light pop on the leash just won't do. I will then make him sit on the sidewalk, next to the fence (not close, but by the yard, not farther down the walk), and focus on me. I will then decide if we do a couple of heeling exercises back and forth in front of the yard (kind of depends on how psycho the dog is going inside the yard).
4) Always make sure to say "good boy" or some other form of reward when he changes his behavior and does what I ask. This is very important -- don't forget the reward!
I even use the "ssshhh" or "aacckkk" sounds (a la Cesar Milan) while walking by some yards where the dog & fence are set farther back. I do this to stop any thoughts of either of them thinking then need to be goofy. If my Rott is looking towards the yard (or house even), I will make that sound and he looks forward. Again, I say good boy so he knows that's what I want him to do.
ETA: That's great that you've found a trainer, but take over the phone advice with a grain of salt until he/she can truly assess your dog in person. I guess for that matter, you should take advice over the internet the same way!
Just use common sense...
