Simulated dog

I recently bought Nintendogs, which is this puppy simulator for the GameBoy. It didn't work very well, so I took it back, but it did make me wonder how hard it would be to simulate a dog. If you try to simulate a person, you have one (well, lots really) very big problem: language. If you simulate a person, everyone will want to talk to it, and we're nowhere near having that working. But you can't talk to a dog. Or, you can, but it recognizes a very limited vocabulary and often doesn't seem to react very well to words it does recognize. This would be perfect for a computer.
So, I think a desktop computer could simulate a dog living in a virtual world successfully. You could have a little microphone and talk to the dog and everything. The graphics wouldn't look totally right, but they would be pretty close, and in five years could look as real as the real thing. So, that could be kind of neat.
It'd be a lot cooler, though, or at least creepier, if the virtual dog acted like a dog that you know. You could send your pet, say, to a clinic where they observed the dog for the week. They could specifically model the virtual dog to be like your real dog. They could get general temperment as well as specific behaviours (my dog likes playing with bubbles for example.) With some motion capture, they could even get the walk, sit, etc. motions down correctly. My hunch is that for 10 grand or so, they could make a pretty convincing simulation of your real dog. So, initially, the dog simulator may be a full-blown program. You run fakedog.exe, and it's basically a game where you play with the dog. There's no reason, though, that you would need a whole separate game for the dog. You could just have the dog always on the desktop. You could have the dog barking at new windows, chasing the mouse cursor, sleeping on the Start button, etc. You could even get on your friends computer, "whistle" for your dog over the internet, and have your pet come bounding onto your friend's computer to play with their dog. When you were ready to leave your friend's house, you could load the dog into a "car" (a normal USB flash drive) and take it back home again. Perhaps the dog could even develop enemies or rivals, so that whenever you talk to DogDude420 on AIM, your two pets get in a fight and you have to lock your dog in a room. Perhaps you and your friend's dogs could have puppies. (A 95 year old Bob Barker: Don't forget to spay and neuter your fake dogs!)
Of course, the more the dog is allowed to interact with you and other dogs, the smarter it needs to be, and the more it needs to resemble your real dog. So, the programming company would need to develop more and more detailed tests of your dogs' brain to provide realistic responses. (Even if the company wasn't trying to simulate an exact dog, they may still need to study real dogs to generate real dog-like behaviour.) The company may even get to the point where wire up a dog's brain, to see exactly which inputs fire exactly which outputs. I'm sure you can see where I'm going with this: at some point, the fake dog is going to become arguably as real as any other dog. Can you imagine how weird this would be?
I will come up with and least ten totally weird things that could happen from simulating dogs very effectively (in no particular order.)

1) Websites may become "dog-friendly" and offer virtual stores to the pets of people shopping online. You may see a normal Amazon.com website, but your simulated dog perceives a huge store, full of interesting things to see and sniff. If you're shopping for dog toys, perhaps your simulated dog could provide some advice by what it is most interested in.
2) Speaking of dog toys, there would be a boom in the sale of simulated dog toys. You have to keep that fake dog busy somehow, and a simulated PetCo tennis ball may be just the ticket.
3) Harddrive crashes bring owners to emotional lows as their very lifelike dogs are last in the crash.
4) Related to the previous utiliarianism post, do-gooders will set up big servers for people to drop off unwanted dogs. The crazy cat lady next door will have a basement full of computers keeping alive 100s of thousands of simulated cats.
5) Divorces and breakups will be easier with simulated dogs. Instead of fighting for custody of the one animal, each partner would simply get a copy. They would each get to keep the dog and if they ever get back together, it seems likely that the two clones would get along famously.
6) New viruses will appear, targeting the owner's computer through their simulated pet.
7) Celebrity pets will be a big business. Who wouldn't want to let their dog play with Paris' little dog Tinkerbell? Better yet, each customer would only being playing with a copy of Tinkerbell, so Paris gets to keep her dog.
8) The fake dog could lead any sort of amazing life. I expect that humans wouldn't deal well with being a swashbuckling pirate one day and walking on the moon the next. We would begin to think that something was up. I don't believe a dog would (or could) have any such suggestions if it did the doggie equivalent. It could be chasing rabbits one minute, take a nap, and then wake up in its owner's arms near a fireplace. If the dog was confused by this change of location, it wouldn't really be able to manifest its confusion to the owner/player. Perhaps as long as the owner doesn't know of the simulated animal's discomfort or muddled-ness it wouldn't matter, because these animals only exist to please their owners.
9) There will be a lobby group (PETSA?) that encourage parents every Christmas to not buy simulated dogs for children who are not ready for them.
10) There will be at least one person's homework, one Word file somewhere that really is eaten by an overzealous simulated dog.

Any other weird possible outcomes?