Some time ago I had the opportunity to read CAP 612 which is the Ops Manual for Police AOCs. There's a section in there relating to carriage of dogs in police aircraft. The CAA advice was that it wasn't necessary for the police dog to lie down, it's best for the dog to be allowed to see out - they're more at ease that way. However, the dog has to be kept on a short leash and under control by a handler, who must not let go of the lead. The link to CAP 612 is at
http://www.caa.co.uk/docs/33/CAP612.pdf and the page you want is 158 (of 226). (Section 5, Chapter 2 Page 4). There's no mention of a cage at all, but they do recommend avoiding large attitude changes which may upset the dog.
So far as taking the dog foreign is concerned, you may not. You may only use approved carriers and routes. Carriage of animals on private aircraft or boats is specifically forbidden. The link to the DEFRA (formerly the Ministry of Ag and Fish) website is
http://www.defra.gov.uk/animalh/quar...nfo/routes.htm
General advice on the Pets Travel Scheme is at
http://www.defra.gov.uk/animalh/quarantine/pets/
Regards
P