Morning Ed -
I have three big dogs (Dalmation, Labrador and German Shorthair Pointer) and the only flooring damage they could accomplish would be to carpet and hardwood floors. My tile floors were installed in 95' with no problems to date, so, I'd give yer' dog a bone and a scratch on the head because he/she's not your grout problem.
You may have a subfloor that doesn't meet deflection standards and through movement/deflection is causing the tile to lose it's bond and in turn, the grout to crack. If the tile remains bonded, the grout can still crack from movement in the floor. But I'll let the deflecto experts chime in on that area.
Your choice of thinset and grout was fine. I prefer to use a 3/8"x1/4" notched trowel for 12x12 and I also backbutter the tile. Using a 1/4"x1/4" trowel is probably acceptable, but without backbuttering the tile, I could see where the tile would not be seated in enough thinset to bond properly. When this tile breaks its bond, the grout will crack and crumble, and the customer/installers first thought is bad grout.
If your tile is bonded properly and the floor deflection is with in standards, I would look at how the grout was mixed and installed.
All the best -