How about, "the dogs lie sleeping" as a way of thinking about it. This emphasizes both their current action and position.
Yes, that's an accepted translation. :0)
In my grammar book, it says that the 2 verb form is more intense than the form with 1 verb. It's a matter of degree. Kind of "they're really sleeping" vs "they're sleeping"
I had so much trouble understanding it, and then I remembered Dutch has the same stuff! The English inbetween is just confusing and didn't help me understand this at all at first.