Well...cut the "dog is my kid" lady a little slack, maybe she was unable to have children or her child was killed. We never know the reasons people do things, they might seem silly, they very well may silly people, or they might be someone struggling through grief. Ya never know.
This is true, but it's harmful for the dog in question. Most dogs treated this way are some of the most mentally messed up dogs I've met. And unfortunately, it's not therapy for the person either, if indeed they are struggling they should seek out professional help