Wow and wow, the head design is significantly scarier on this version! In a good way, too... the approved design could have been seen as either a good guy or a bad guy, whereas this design would be unambiguously Bad News if you ever came across it.
Although I'd still like to imagine the Big Bad who owns this hound go all mushy-talk at him when no one else is watching. "Who's a good boy? You are! Ohyesyouare!"
Unfortunately, it was cut from the creature list because of budget. Guillermo wasn't happy about having to cut him out, but promised me that he would be in some future project of his, possibly Hellboy 3.