One of several things may have happened here.

She was on the previous flight and had to leave with her dog for a necessary reason, maybe to provide her dog with an opportunity to relieve himself properly. She would then be allowed to board before any local passengers. She would not have a local boarding pass.

She was preboarding. Preboards should not be in exit rows, dog or no dog. Did she have a preboard sleeve?

The standard dog carriers (which must be used on the plane unless it is a service animal) do not fit well under all seats and she may have requested permission to find a seat in which the carrier would fit. She chose the exit row. As long as the dog stayed under the seat, it is not an exit row restriction any more than a personal item is.

If it is any consolation, she paid $75 for the privilege of bringing the little dog.