The situation probably wasn't handled as best as it could, because Captain Pedant should not have been placed in that understandably precarious situation to begin with.
Customer Service agents should have politely made necessary arrangements for this person and his dog.
Sorry Manwell, but IMHO the Captain was correct in standing his ground. After all, it's his licence at the end of the day. Not the FA's, not the Customer Service agents, and not anyone else's. Rules can be followed with compassion, empathy, and common sense. It's all in the delivery.
And I do hope you weren't implying that disabled persons should be seated in exit row's?