I'm not big on the breadcrumb trail idea, I think it kind of ruins purpose of the dog. If the dog only exists to take players off the path then why travel with him? Won't people go off the path and explore without him?
It seems kind of funny that they would go this route. Wasn't it recently said that they didn't use all the buttons on the controller? So why not have a button to switch your dog's AI from quest to explore? If you want the dog to lead you to every group of hobbes in Albion just put him on explore and he will lead you off the path. Put him on quest and he will lead you to where you need to go, if you get to a point where a side quest and main quest branch have him stand there and you then need to make the first move.
If they wanted to keep the dog 100% control free they could map that button to a full screen map page. If someone was to give you a quest in a far away place you think they would tell you how to get there, every quest could come with a new map. So your in the middle of nowhere, hit your back button, full screen map pops up and shows you the path you need to follow, moving your thumbstick sideways will change your quest maps.
Hopefully whatever they come up with works well, I just don't like on screen reminders of what to do and where to go.
Are you an ODST (fanboy)?