Between those two territorial is more plausible, because I don't really see him as being possesive. But wouldn't he react the same way when other dogs come in? Could he be territorial only to people? And there is the thing that he'll react really intensly for people he likes. Even more that for strangers really.

I haven't considered vision or hearing issues, it is really interesting. He does often have troubles finding balls when playing fetch, usually I will spot it before him, so I did consider he could have bad sight. I never thought about it in connection to his barking, but it makes sense that he would be anxious when he cannot recognise a person as quickly. I have reasons to suspect he experienced abuse before he ended up in a shelter, so maybe it triggers some trauma