Re: how does the dog get hurt in fable 2
No unfortunately not. When you co-op, it is more as a henchman in other games. When you couch co-op there is not a split screen either. I wish there was, but there is not.
Your dog can get hurt just a the character does...In combat. I don't think the monsters will target the dog specifically. There are multiple ways you can "spec" your dog. You can teach him/her to attack everything it sees, only things that are lying on the ground, etc. The way you train the dog, reflects your play style and your alignment too.
Hope this helps.