Baumi
Adventurer
Yeah, the limited intelligence is an issue. For example, did the player come up with the "dog runs up to distract guards" thing? Dogs have a whole whopping 3 Int. I am not at all sure that kind of tactical planning and understanding of the party's goals and the behavior of others is within a dog's capabilities. In fantasy, we might live with having a character order a dog to do such a thing and have it work, but come up with the plan all on its own?
Maybee he was a prince that was cursed to live as dog until he learnes his lessons or get kissed by a girl (fairy tales do that a lot


Anyway I also have someone in my group that loves to play Animals or Magical Beasts (Dragons). So I don't think that it is too uncommon, Heck even Dragon Age gives you a Dog as a Party-Member and he is quite fun.
In a big group there shouldn't be a Problem with an Animal, he can even team up with another Team Member as a Trainer or play really as an intelligent beeing (cursed, magical animal,..). If the group is small and need every member to functions as good as possible then he should have some kind of abilities to communicate or even shapeshift.
Since RPG's are all about fun and playing someone else, I personally don't see the harm in letting him play an Animal .. just talk with him and the rest of the group about it first so that you find a good middle ground (not too silly, useless, etc.).