well, imo, my speculation is... the king may(?) also aware of dog's true nature as it can also serve as a plot twist(?)... the reason why king still having faith with the dog is probably because of his undying loyalty and unyielding determination to the kingdom... we shouldn't forgot that the king himself is half-breed and had to hide the secret that not even the close aide (the dog) know... and i'm pretty sure the situation will turn sour when that dog is finally learn the secret of his king... my speculation is the author will use that plot twist to start making the foundation of the ending... speculation is just speculation, lets just us wait for the story to unfold...