While I have never dyed the hair on a dog, my old roommate's dogs didn't mind being drawn on.
We'd give them pirate patches or glasses (non-toxic markers of course!). They'd get lots of attention and giggles and they were very playful because of the attention & seemed to like it.
I only think it'd be cruel if you had to hold the dog down to do it...

That's just my 2 cents.