I agree with the advice of reporting the owner to the RSPCA, it appears she has no control of her animal. The sad thing is is that if this was a child then the police will be all over this like a rash, and I hate to hear that a friend has lost his cat
I know what I'd do if I saw a dog with anyone's cat like that even if not my own I'd chase after it the dog and batter its legs, but that's just me.
Like Agent said, tell the police in person and impress on them that it could have been a child.