I'm very sorry for you and your little dog...even blind Freddy can see that the other owner is at fault. When out on the street or in a public place you must have full control of your dog regardless of breed at all times...that's the law.
Any decent owner would pay the vet bill for injuries caused by their dog or at least offer half...but it seems this owner isn't taking responsibility...so make him pay. I think he's trying to scare you because he hasn't a leg to stand on and he bloody knows it if it went to court. I hope your dog makes a full recovery...please don't blame all Rotties for the actions of this Irresponsible owner...this wonderful breed does attract some real morons...I recently lost my gentle Rottie to cancer and she has never hurt a fly.