OK, so no shade on your idea, but you actually can tell your dog he is OK.
Using a loud voice is a good indication that there is a threat or play, one of the two. Using a super quiet voice, such as a whisper, can convey the opposite. I have worked with a bunch of dogs and the most effective thing I have found for reducing barking and panic is to whisper their name with a positive tone and get down low enough for cuddles and petting.
They tend to look at me confused, tilt their head, then eventually stop barking and come over. I then give them quiet praise and lots of petting and cuddles as per their preference. Over a fairly short time they tend to shift to a short set of barks to announce the threat followed by coming to me to seemingly verify my attention to the issue, then they settle down.
This is mostly with either family dogs, 5 of those, or client's dogs, another bunch to varying degrees.
Also, I would recommend Training Levels: Steps to Success by Sue Ailsby. I have used that book for a lot of dog and cat training and honestly it also works with how I interact with kids. Clear communication, lots of praise and love, capturing behaviours and associating them with words, and never ever using negative stimuli like hitting or yelling. Or as I see it now, respect. Dogs are intelligent beings and if you try to find your common communication tools you can be much more effective at sharing your needs and getting their buy in. Same with kids, actually listening to their needs and observing their behaviour gives you a massive step up, and then never ever being mean or unsafe and always being safe and protective can take you a long way.
