JPat, your story is quite interesting. This situation was in clear violation of FAA and airline rules, service animal or pet.

-The cabin or checked baggage pet fee is $100 each way.
-First of all, a passenger cannot have a pet in the exit row, no matter how small.
-In order to enter the cabin in the first place, the pet must be small.
-Animals must have a kennel, and stowed under the seat during take off/landing.
-You may purchase a seat next to you if you are traveling with more than one pet. But you cannot simply belt it in place.
-Large dogs (like your example), most definitely cannot ride in the cabin.

exception is a service animal. I see these every once in a while but never was "fortunate" enough to sit next to one. Every one of them was clearly marked with that green cloth thingy.

The service animal:

- must not be in an exit row
- cannot sit in a seat
- must sit at the travellers feet (assuming its a small animal)
- markings help (and the owner of the service animal damn knows well to make it apparent), but no markings are required. Apparently, verbal assurance is "good enough"

documented:

http://www.alaskaair.com/as/www2/hel...ServiceAnimals
http://www.alaskaair.com/as/www2/hel...-With-Pets.asp

All this service animal talk is making me want to fake a disability so i can have a service rabbit or perhaps a service kangaroo.