It does sound like possessive/guarding behavior. Putting her down on the floor and ignoring her when she misbehaves is what I would do (she loses what she she most wants -- you). I would put her down the minute I noticed her getting tense, though. Don't wait for a growl.
You could also set up some training sessions so that she's especially exposed to instances of people and dogs coming toward you. Reward her when she allows it; put her down when she gets tense.
Friends and their dogs can help you with the special training sessions.
Cedar (tri), Willow (blen), & Holly (ruby)