The Reincarnation of Animals

I just finished reading The Art of Racing in the Rain: A Novel by Garth Stein.  Great book to open the discussion of the purpose of animals in our world.  In the book, Enzo is a dog who has reached his last animal incarnation, and his next life will be that of a human.  The book is sweet, if somewhat predictable, but its main premise is that animals are of a lower intellectual caste than humans.  Yet Enzo thinks as a human does, with an awareness of his emotions, right and wrong, and the relationships between those he observes.  Do our animals do this, or do we simply assume that they react merely out of instinct and external stimuli?

Interesting thought.  Comments?