I think allergies is a silly reason to deny a dog from going into a store. I'm highly allergic myself to dogs, but have never had a problem being around something so small in an enclosed bag. I'd worry more about the dog hair on some people's clothes standing next to me in line.
I do agree though that as pet owners we can't really get too upset about store rules and regulations. I hate that I can't take my dog many places, but I know that's how it is. I'm too wussy to sneak them in anywhere also