With the soldiers. I really find it hard to believe that they would not have shot the governor as soon as he cleared leather and shot the first guy. Personally I totally do not believe that is the way it would go down. Sure they would have all died in the end, but not without at least having fired a few shots. There is no way the entire group of them would be so dumbfounded by seeing the first guy get shot.
Rewatch the episode and do a count of the seconds that pass before the crossfire ambush opens up. Those soldiers had their weapons locked and loaded and at the ready. There is no way they would not have returned fire as soon as the governor fired his first shot. The response time would have been instinctive and instantanious.