In all the scenes before the actual dog chases Benny, the dog used is obviously fake. Whether it's a puppet, mechanical, or a mechanical puppet is beyond me, but couldn't they have tried to at least use a real-looking one? And no real dog could do all of that stuff anyway.
The dog was supposed to look fake during those parts. The kids were imagining that the dog was way bigger than it was and that it could do all those things. They made the dog out to be some legend and hyped it all up. Have you ever read Calvin and Hobbes? well it's sort of the same thing with how Hobbes and Calvin do all those things. It's supposed to be all Calvin's imagination.
Well, the dog was exaggerated by the kids. It was meant to look real big and scary. The stuff that was said didn't really happen. It was just rumors and stories that got spread around. It's all pretty clear to me. When they show the actual dog he's a regular dog. They finally see that the rumors aren't true and that he's not really that mean, just a dog guarding his territory.
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