caudor said:
1. Will raise dead even work on an animal (or is there a more appropriate Druid spell out there)?
The spell's target is "dead creature touched." That's any creature, including animals. The only types that can't be raised are constructs, elementals, outsiders, and undead.
As has been pointed out, the more important question is whether the horse wants to return. That's a DM call. Personally I'd be lenient, and have it always return unless it was mistreated.
2. Would it be likely that a cleric would be insulted and/or refuse such as request because it is an animal?
That depends on the cleric, of course.
In certain game worlds, there may be clerics who see divine resurrection as Something Special. These are the type who require a special quest before they deign to
raise your buddy, and they might very well be offended at the thought of "wasting" such a blessing on an animal.
On the other hand, the followers of a deity of Trade would likely be more mercenary about the whole idea. By making the appropriate donation you become eligible for one
raise on the target of your choice. If you're rich enough to buy the spell for your pet ferret, they're not going to refuse your money.
3. Would a raised horse still be servicable as a mount afterwards?
Sure. When a creature with no class levels is
raised, it loses one point of Constitution. The worst that would happen is that it'd lose a few hit points, and have slightly less stamina for long journeys.
Oddly enough, all the horses in the MM have odd Constitution scores. This means that you could
raise them once without affecting the ability score modifier; in game terms they'd be exactly as effective as before they died.