Up is for people you know, down is for people you don’t.

I don’t think this is exactly true. It’s all about your facial expression. You can give a stranger an up nod if you kinda give a, “eh. What a day, huh?” kind of expression. You can greet people you know with a down nod with a kind of, “g’day sir” expression. Here are many varieties on this.

But if you keep your face blank/hard, then yeah, I can see an up nod to a stranger coming off as hostile.