It does seem as if the cotton just dissolved, but that's over 250 washings. It's a little surprising that any part of it survived. I would say it served its purpose well enough. Maybe you can help your friend decide that a handmade quilt isn't the thing to use in this way. I guess your friend appreciated it if she's hoping to have it restored, but perhaps if you want to be generous you could make a little wall hanging out of the best part of this and suggest (or give her) a Walmart quilt for the dogs. It would not be worth your trouble or expense to make something that is going to be put through this kind of wear and tear.