I saw something similar on one of the forums I'm on....might have even been this one. Someone had rebuilt their aluminum pannier into a place for his dog. It might have been a Yorkie, but definitely a small breed. The pannier lid had a nice padded opening; the dog sat in the pannier, and there was a restraint system inside that hooked to the dog to keep him from jumping out. The lid closed, and there was even a little windshield on top the pannier. The dog even had a set of Doggles, if I recall correctly. He looked like a WWI Spad pilot. The dog looked happy enough, but I can see how it could also freak a dog out.
I've seen some really nice dog trailers for motorcycles. Some of them made me wish I could lay in the trailer and someone else rode.
"No matter where you go, there you are."