Please know that not every dog will be completely trustworthy around livestock or small critters. Sometimes it's their personality, and sometimes it's their breed/genes. This is not your fault, because it's not always something you can 'train out'.
Just wanted to get that disclaimer out.
It...
While I agree with using positive reinforcement, if the purpose of the leash is to make sure she stays as close to the 'scary thing' as YOU want her to be, I have to disagree with the leash.
Seeing as how this one particular incident has made such an impression on her, flooding her won't help...