Not sure where sex comes into this; there's no implication of that intent in the comic that I can see.

But you've opened a can of worms. One of the main issues that makes bestiality illegal is the animal cruelty / distress aspect. Here, what-, or whoever pops out of this spell may be capable of consent for such shenanigans. As such it wouldn't necessarily be cruel, and so might not qualify as illegal, at least not for that reason.

I'd be surprised if any jurisdiction has legislation for inter-species sexual relations where both parties are sapient and can consent. There's only one sapient species on this planet as far as the laws are concerned. (Yes, yes, dolphins might be, and so might squid. The laws aren't there yet.)

That said, I'm no lawyer. There are, or have been, laws against inter-racial relationships, that is, between members of the same species (although I'm not sure the lawmakers who wrote them necessarily agreed with that assertion), so those laws might end up being resurrected with certain amendments because "ew, dude made a sapient she-dog and got jiggy with it. that ain't right."

As for the morality and ethics, hell if I know. I don't want to have sexual relations with a sapient she-dog any more than I want them with certain members of my own species.