I don't think I would ever do that to a dog, mainly just because I think it looks kind of dumb. But if the dye is made so that it doesn't harm the dog in any way then I don't see a problem with it at all. In fact I wouldn't be surprised if some dogs enjoy the extra attention they are getting while they are putting the dye on them. So while I would never do it, I don't think that it's cruel.