I have a toy poodle and have never ever considered dying her hair. I say to each thier own, I wouldnt personally dye any of my pets but I dont think there is anything wrong with it as long as its safe. It you want your dog to look like an easter egg, then so be it.. its your dog.
My vet tech has however painted their toe nails when Ive had my females spayed. She thought it was cute. I didnt mind it.. and it did look cute.