Cheap scouts, fastest non vehicle unit, anti infantry, cannot attack anything else and are very vulnerable (no armor) to explosions, shells, fire, shocks, etc.
Available for both sides for better balance. Dogs would have a special vision detecting enemy infantry (call it a "smellvission", e.g. enemy infantry would appear red on hud). This way dogs would be able to detect spies but also other enemy infantry from certain distance and/or possibly even through obstacles. Another alternative is that they would have special radar only for detecting enemy infantry (which would always work even if radar was down or not available).
Flamethrowers and starshinas can attack buildings and vehicles, they have armor. Dogs would not be suitable for frontal attack due to low health and no armor.
Mostly for defense, scouts ("smellvission"). They might be good to clear enemy buildings from technicians and engineers or support vs mechs, doctors, spies, and other support infantry so a potential support for small group tactical attacks. Potential threat to commando infantry if they are unaware of a dog nearby.
Very close melee/aoe attack affecting single infantry health. It could work with a possible jump trigger (left click while targetting infantry = jump attack). Low and middle tier infantry should die instantly.
No AI unless it's a special map feature. Player controlled dogs are fun as seen in AR, they offer something unique in regards to gameplay. They shouldn't be hard to balance since they have limited use and no long range capabilities. If anything it would make infantry rushes more interesting/challenging.