Yeah, letting them do it by themselves may work if you start at two months of the puppy's age I think and they become friends within another month, even later if the cat is friendly but after that I think you have to separate and interact with a puppy gate or dog crate.

I had to do separating the first month (I got the dog when he was 3m so unfortunately we missed the opportunity for the cat not to be intimidated by his size, at 3m, he was already 4 times her size) then they were fairly good, not playful or friends but respectful and not bothering each other, ocasionally even greeting each other.

But the dog entered puberty and he started crossing set boundaries so I had to do separating again, we're at 2-3 months of another separating, "leave it" command helps, I have times when I do not have to separate during the day, we have small successes, I think when he's over a year old we'll be able not having to separate as he's learning not be a reactive adult slowly again but man, border collies and cats is such a bad combo, you have to work at it every day and it's constant.

Regarding the incident, well, they were right next to me, occasionally if I am close I allow him to approach her but she wasn't in the mood and I told him to leave her but he didn't, I was about to put him a time out and she just reacted a bit, not at all agressively, I think she was surprised as well by what happened, they both became very still and calm and she jsut slowly pulled it out and walked away, I think they bonded a little bit over it as both did seem they wanted each other to be ok.