My dog is the same but for human strangers. She's so afraid of them and wants nothing to do with them. That is fine, she does not need to be friendly with everyone but I cannot accept all this barking nor any aggressive behavior (lunging but she never nipped or tried to bite anyone) so I started training and training. Today, she will still bark at strangers if they are at our front door or are coming fast towards me but all-in-all she is a totally different dog. Progress is achievable.
First off, understand that she may not want to be friends with other dogs, that is okay. I do not talk to everyone I see on the streets or out shopping and that is okay. What you need to teach her though is that not because a dog is far out over there, does she need to bark to keep it away. Dog over there does not translate to a threat.
One concept that helped me a lot is BAT training (see description here
http://functionalrewards.com/BAT-basics.pdf), it made me understand what my dog was trying to tell me with all that barking. She simply wanted to tell the strangers she is afraid and they should stay away. The look at that game is a great one to play also (I did a quick search to find a link explaining it and found this
http://clickerleash.wordpress.com/2...itive-approach-to-dealing-with-reactive-dogs/).
You need to use high-value rewards like cheese and such when you train to make it much more interesting to her then what she is looking at. Cut them in little pieces (to a dog the size of the treat is not important as how many treat they get). Reward at a crazy high rate (she looks at a dog : click-treat when she is not reacting) when she is doing something good when you train.
Last piece of advice, I had a lot of success using a wooden spoon full of peanut butter when I was taking Kyara outside to do her business. That was when Kyara was so reactive that every time I opened the front door to bring her outside too pee, she started barking like crazy even though no one was there. The peanut butter spoon was easy to lower down quickly for her to lick right before she reacted and then it gummed up her mouth to prevent her from barking ahah.
I hope this info can help you somehow! Best of luck, it's not easy to desensitize a dog but it is achievable.
P.s : some play time in a quiet place with only one other dog that you know (if you have a friend with a calm dog that is good with other dogs) could probably help also.