Huzzah for the simple dog!
While you're correct pronouns agree with the natural gender of humans (e.g. cailín takes í even though it's grammatically masculine) this doesn't extend to animals.
In traditional usage the pronoun agrees with the grammatical gender of the animal. So madra, cat, tarbh srl. would all take é and bó, péacóg, stail srl. would all take í. Note that stail means "stallion" so is naturally male, but still takes feminine pronouns. This remains true if you qualify them with an adjective like madra baineann. So even if the dog in question is female the traditionally correct way of saying the sentence in the exercise is still is madra simplí é.
There's a slight complication with phrases like coileach péacóige or stail asail where a genitive is used to specify the species. In that case the pronoun agrees with the grammatical gender of the genitive noun. So coileach péacóige would take í and stail asail would take é.