It's a fuzzy line, but it's there.
Not really. At least not a line. Species definition criteria vary from scientist to scientist. The criteria used to determine distinct species by a botanist seem to be very different from those used by a zoologist or a entimologist.
Let me put it to you this way, the level of difference between a beaver and a squirrel, is huge. You can't present dog variety as a prior precedant.
That's what I'm asking: how huge? How 'huge' is the genetic difference between squirrel v. beaver and wolf v. pug?
So squirrels and beavers live in different environments and look different, so what? So do wolves and pugs. So do black bears and polar bears for that matter.
A black bear looks a lot more like a polar bear than a squirrel resembles a beaver, does that mean the genetic difference between black bears and polar bears is LESS than the squirrel v. beaver?
It might not be. But my point is that your argument 'feels' right, but surely there must be actual genetic evidence that would drive the point home. Otherwise, you are just arguing morphology - which falls into the 'kinds' trap.