Well, he's got to buy their love, right? If one of my kids weren't allergic to dogs, I'm sure that XWH would have already done that. I mean, what kid doesn't want a puppy? Major points for awesome dad!
I'm sorry, hanging. I'm also sorry for that dog because it will probably not get the attention it needs. Just remember that when he asks you to let the dog come home with the kids, that you say NO. I guarantee that he'll go on some trip with OW and think he can pawn the dog off on you so that he doesn't have to spring for a kennel, and then you'll be the bad guy to your kids if you don't go along with it. If he wants a puppy, then he can take care of the puppy.
Oh, and for good measure: FTG.