Yes, I made the same assumption as most. Sorry about the violence visited upon Mr Happy, ThankQ. It looks like there's some hope of repairing him. At least from the physical damage. Why does this picture make me think of Watchmen...?
The second picture of your dog is hilarious. It looks like he has been exiled to Siberia for his "crime".
Aw, poor Mr. Happy. It sucks when a favorite toy you've had forever gets ruined somehow. When my Kermit the Frog doll lost a leg when I was seven, I was inconsolable! My mom fixed him, and I still have him! ETA: Here is Kermit, bruised, scruffed, eyes scratched, but still "alive" at age 32 (I got him when I was in kindergarten)!
Ugh. I have seen Aladdin far too many times. When my niece was growing up, that's all she wanted to watch ...