True story.
I can't even remember how many times I've heard some version of that from many women who have had this exact experience. At FIRST, its awesome, couldn't BE better as far as HE is concerned. But, that's only in the very begining. AND, only when he is PRESENT for every single interaction between her and the dog.
As soon as Mr Happy gets the 1st clue that her activities sometimes happen when he isn't there, well, that's when the reality comes home to roost. That's the moment when he realizes that this thing isn't entirely about HIS fantasy, shocker, she is a person with her own thoughts and desires, not all of which revolve around his dinkus. That's when the jealousy and butthurt start and it only goes downhill from there.
Some facts very few men want to hear........Only YOU think this is ever going to happen when you are around. She IS going to fuck the dog without you being present. And, she might, or might NOT tell you about it when it happens without you. She might or might not tell you even if you ask. And, if you think an ultimatum will fix this problem, you're right, except that the fix is most likely NOT going to be what you think it is. The fix might very well be YOU go, the dog stays. Why? Because you've just announced to her that YOU aren't who she thought you were. But, the dog is exactly who she thinks he is.