"Cats and dogs are all cute."
Not necessarily. Either "both" or "all" makes sense in the English sentence, but they have different meanings. "Cats and dogs are all cute" means every cat and every dog is cute, without exception. "Cats and dogs are both cute" is making a general statement about both types of animal -- cats are cute (in general), and dogs are cute (in general).
To me, the latter meaning seemed more reasonable, so "both" did seem more natural in this sentence than "all" -- but I don't know which meaning the Chinese sentence has, or whether it's ambiguous.