Quz, I don't agree with your argument because I think you're
anthropomorphizing the dog.
To the dog, the choice between castration and vasectomy is like the choice between a coffee mug and a bicycle. It's simply not something he ever ponders.
Nor is the loss of his sexuality a burden. He simply doesn't sit there and ponder all the poon he could have gotten. Did you ever see a dog with three legs? He doesn't care, not one bit. It causes him no angst at all. He doesn't become morose because he's not like all the other dogs. He just looks around, says "oh ok, now i've got three" and from that point is normal. The reactions we think he might have are human emotional reactions -- based on our experience of the world, not the dog's.
We often restrict the free will of dogs both to make them more compatible with our lifestyles, but the reason this all works is because dogs are instinctively pack animals and are roughly oriented to follow orders from top dogs. We are the top dogs. Most dog training classes are actually human training, to train the humans in how to act in ways the dog instinctively understands.
We also restrict the free will of dogs to improve their lives. Given a "choice", a dog will eat week-old roadkill because he does not have the advanced thought processes to understand that his human master is able to guarantee a regular daily meal. (In fact I often stop mine from eating wires and hardware that's fallen on the floor, because domesticated dogs eat things just to see if they can digest it, even if it could possibly kill them.)