@Sean375
I would say to the guest that YOU (=guest) can enter but at no time can your dog enter my home, and basically stand guard and refuse to let the guest enter WITH the dog. This is what I'd tell Airbnb CS as well - the guest is welcome to stay but an absolute NO to the dog. It is up to the guest to decide whether he will find a dog hotel for his pet or cancel and find somewhere else where he can stay with his dog.
Never cancel yourself and never say you want to cancel. Say you are happy and willing to host the guest as long as he respects all house rules as he agreed to when he booked. Stay firm about not allowing the dog. I would say that if the guest can make other arangements for his dog, then he is more than welcome to stay, but you refuse to break your own rules and the dog is not welcome.