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1. As mentioned Peter Pan - the story - has the children with a "Nanny" - a sheepdog. There is also information that we will indeed have Peter Pan possibly coming into the series as we have had Hook make one.

or...

2. OK, "The Shaggy Dog" is NOT a fairytale - but it did have a sheepdog in it and the boy who had the cursed ring said the incantation and changed into a sheepdog off and on throughout the story. That "magic" could factor in here.