There is no error here. You can use es with any gender, e.g. Ist es seine Frau? ("Is it his wife?"). It has a different meaning than Ist sie seine Frau? ("Is she his wife?")
Ist es sein Hund? - Is it his dog? - definitely correct and widely used
Ist er sein Hund? - Is he his dog? - limited use, e.g. in some cartoon or fairy tale
Is there a reason the sentence can't be explained at the beginning of the discussion? All the wrong why's of how people think it should be, but it's not, just muddy the water and leave me trying to remember what the correct answer is and why ( if I can even find the answer). Most links cited no longer exist.