That`s some terriers for you. Lots if them have fiery natures and also being small they tend to like showing the world that just because they are small they are a force to be reckoned with (or hope they are). Its inevitable that one day they will pick on the wrong dog and one that will stand no nonsense from a `pip squeak` such as a cocky little terrier.
Obviously if your terrier has still not learnt his lesson at 8 years old he is not going to change his attitude now, no matter what.
What can you do in the future?
Its now up to you to keep him safe and away from other dogs and chastise him forcefully when he barks at them whilst on the lead and reward him if he is quiet.
Make your side of the fence solid, so that your terrier mix cannot see your neighbors dog.
It was unwise of you to not be very concerned about your terriers behaviour, and you should blame yourself for your dog getting bitten.
He could have been killed!!
A barking terrier will not scare a big dogs and most big dogs will tolerate a smaller barking dog as no threat, and often the small dog barks because it is scared and is trying to frighten the larger dog away.
But other some large dogs if pushed too far WILL retaliate, and ESPECIALLY a breed like Pit Bull type dog.
I hope you have learnt something by this episode and will be more cautious in the future and more assertive in correcting your terrier mix`s lunging and barking.
GSD owner for 56 years.