The dog was introduced at GDC in March this year, but more exclusive details about the dog itself emerged at AI Innovations 2007 conference in London - including how the dog's artificial intelligence works. Lionhead is borrowing design and technology from the Black & White series as well as the original Fable.
Molyneux first presented three design guidelines, which he considers similar to Asimov's Laws of Robotics. The idea is that AI in games generally, and the dog in Fable 2 specifically, should be there for your entertainment. It sounds obvious, but having a set of laws makes it easier to achieve.
The new concept arts are available below.