While I agree with a previous poster that most animals are probably closer to God than humans are, and the "higher self" of animals can be very evolved and intelligent, the energies of them are so dramatically different in complexity to that of human beings that I really struggle to see the two as being compatible with one another.
I love animals and have spent a lot of time learning to communicate spiritually with them. Spirit entities vary massively from the tiniest, most simplistic souls like insects which have almost no self-awareness to those like humans and beyond, I am sure, to beings far more complex and expansive than we are. Simpler spirits seem to be drawn to those more complex and evolved than they are, the way humans are drawn to God, which is why humans often have protective or friendly animal spirits around them. But in speaking to those in spirit, there is just no comparison to be drawn between speaking to someone who was human in life and communicating with animal spirits (for example, I have a little bird spirit with me which I have communicated with and it "spoke" in little twittering bursts of energy which was quite lovely and thoroughly delighted me - but it could not be called a coherent conversation!). I feel that an animal which seems very human or intelligent is more likely to be a very evolved animal soul, like the canine equivalent of a spiritual teacher, rather than one who has been human and decided to incarnate as an animal. Perhaps progression from a more simplistic soul to a more complex one is possible, but I just cannot see it the other way around. Our spirits expand in their complexity and intelligence; that is our journey.
I have actually come across very few people with the silly stories about being Cleopatra and so on, but I think the people with outrageous stories about previous lives are often those still discovering themselves spiritually - I remember being a bit perturbed when I first met my spirit guide because I thought he was telling me he had been a famous historical figure, but I turned out to be mistaken and he had simply shared a first name and birthplace with this figure (and it was a name common in that era). Spirituality can be so moving and exciting that it's easy to jump to mistaken conclusions and get worked up about them. We learn and grow from that sort of thing.