Yoshihiro wasn't as involved as he was with Toei when making Nagareboshi Gin. (But we don't talk about episode six) They were basically given manga art and told to recreate it. Personally, I would have liked the wolf arc to be animated by Toei instead of Densetsu Weed becoming an anime, but the Dragon Ball project came up. Rumors have been spread about how it was under development before it was scrapped.

Nope, they've never seen a dog indeed...
Not sure if I am wrong or not, but I have read somewhere that the studio deen that made the anime, really had no idea, they had never drawn dogs and so, this is why the anime looks so bad...