Also a random thought occurs to me, what exactly identifies a dog-turned-human in this universe? Would a human be able to pretend to be a dog-turned-human by just putting on a collar?
Could just be me misremembering/making headcanons, but I think all of the dog owners in town know or have at least encountered one other dog owner. So there's likely a "friend of a friend of a friend..." kind of network that could sus out whether a new dog is actually a human pretending to be one.
On that note, it would also be interesting if strays - something not included in that friend of a friend system - get turned into humans, since it would be hard to verify their dog/human identity. Or the strays as a collective could be introduced as a sort of local gangsters, if the whole town knew a band of stray dogs pre-anthropomorphization. Maybe strays don't even exist in this world of sunshine and butterflies, who knows.