I really like this piece, although the area where the land dips doesn't look right for some reason. Maybe its your use of green, and then the brown line.

I gave this a high ranking just 'cause I love the story of it.

The water is a little weird for me, but I still love the idea.  Reminds me of the Fox and the Hound a bit (though only loosely).

I am touched

The dogs don't use any dithering therefore I don't understand the logic with dithering everything else.
With the colors you have you could shade and even create more atmosphere, like where the land slopes by the waterfall. Your darkest blue even has a greenish cast to it and could be used on the land without much obvious blueness.

anyhoo, very sweet pixel.