Yeah, that is one big downfall of muzzle IMO..if the dog IS attacked they cant fight back and a whole host of issues can pop up. Personally, instead of muzzling your dog I would get an airhorn, some pepper spray if needed, etc etc to break up or scare off loose dogs.
Odds are Malyk's aggression and frustration will only increase if he's muzzled, unable to defend himself, and loose dogs are attacking him. I would NOT feel bad about my dog injuring a loose dog who attacked them at all. Most importantly YOU need to protect your dog... stand in between him and the other dog and airhorn/pepperspray them. Be constantly vigilant about looking out for loose dogs and avoiding them. Call animal control EVERY TIME you see a loose dog. Eventually that should make a difference.
Like Green said, work diligently on desensitizing him to other dogs. His reactions and challenges provoke the loose dogs. Take him to local parks and areas with other dogs on leash and under control as often as possible, and practice Look at that/Behavior adjustment training/Counter conditioning. If he is relaxed, odds are other dogs will not approach him.
My Corgi used to be reactive to other dogs, and loose dogs would target him, making him more & more reactive. After reading Click to Calm and working on LAT every single day on every single walk, he's incredibly relaxed, knows how to exhibit calming signals, and doesn't pay much attention to other dogs loose or leashed. I can't remember the last time a loose dog even came close to us & we do see them often.