Well, as far as I know, there has only been one previous incident similar to this and it involved someone killing someone else's dogs after provoking them in a no-PVP area, just as this one. I believe the punishment was a small fine for the damages and the replacement of the wolves by the moderators.
As far as game policy questions go, I would have to say that dogs would be considered property, just as any other item or block you might have in your possession, because it takes time to earn them and once you do find them, they stay with you for essentially forever (provided you feed them properly). I would probably put this pretty close to griefing, actually.
Provided you are absolutely sure he started the fight himself, and you didn't sic them on him or anything of that nature, everything should be in order. Use Photobucket, Imageshack or Imgur to upload the screenshot if you can (imgur doesn't require an account).
Suggested Fine: $500 ($50 for each dog killed)
Suggested Restitution: Replace the dogs.
Waiting for Screenshot.