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Are dogs allowed down in the Hobbit Hole?

Certainly! - hobbity folk have dogs... good honest beasts they can count on, of the type that are not too fancy or fractious!

Here is a nice little piece I like: (don't get me started on dog poems.... Oh - too late!)

THE CREATION OF MAN'S BEST FRIEND
God summoned a beast from the field, and He said,
"Behold man is created in My image. Therefore, adore him.
You shall protect him in the wilderness, shepherd his flocks, watch over his children, accompany him wherever he may go, even into civilization. You shall be his companion, his ally, and his slave. To do these things, I endow you with the instincts uncommon to other beasts: Faithfulness, Devotion, and Understanding, surpassing those of man himself. Lest it impair your courage, you shall never foresee your death. Lest it impair your loyalty, you shall be blind to the faults of man. Lest it impair your understanding, you are denied the power of words. Speak to your master only through your mind and your honest eyes.
Walk by his side; sleep in his doorway; ward off his enemies; carry his burden; share his affliction; love and comfort him. And in return for this, man will fulfill your needs and wants, which shall be only food, shelter and affection.
So be a friend of man. Guide him through the perils along the way to this land I have promised him. This shall be your destiny and your immortality."
The dog heard and was content.