Kelly, in terms of allowing the cats to hiss and swat the dog, I'm going to tell you why we allow it here. Our cats, though they've literally been around dogs since they were born or still young enough they didn't know any better, still need to be viewed by my dogs as not only part of the family, but above the dog in the hierarchy. Our male was born into the house. He's been around dogs since day one. He slinks. He will watch the dogs and he'll do that slow creepy slink cats do where they're trying not to be noticed. My female, she's the boss. She rules over the animals. She is the one who will straight up attach herself to a dogs face and not let go if it means her point gets across. I've had to physically detach her from a dogs face. She will stare. She watches. She is not only the one who will hiss and slap at the dogs, but she's also the one more likely to instigate. She likes reminding the dogs and our male cat, who is the boss. The dogs respect her.
Our puppy is just that. A big puppy. He's 9 months old and tries oh so hard to be friends with the cats. He's very slowly connecting the dots that if he's calmer, the cats will let him keep his nose. He really behaves with them like they're just funny looking dogs.
Keep enforcing the leave it, and break his focus when he does focus on the cats. I'm sure he'll continue to be respectful as long as you are consistent. It really does sound like he may just be trying to figure them out.
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