As noted above, we have begun flying rescued Australian Shepherds for the Aussie Rescue Placement and Helpline (ARPH), making us the charter members of ARPHAir, of which Bill Greenburg is the only other pilot for now. In that situation, i.e., not knowing the dogs, we mount a crate in the back of the plane (Grumman 4-seaters have flop-down rear seats) and that's where they go. After an hour or so in cruise, if the dog is relaxed, we may open the gate for a bit of reassuring petting, but if any doubts arise, the dog stays locked up. We had one who oozed his way into the front seat, and then wanted to sit in my lap while I was flying -- not cool. He got stuffed back in the crate and left there for the rest of the flight, during which he stared long and hard at the latch, trying to figure out how to open it.
As far as sedation, I know that the effects of sedatives are increased with altitude, and without knowing for sure the effect on any given dog or the altitude at which we'll fly, we do not sedate them. We give specific instructions to that effect to the sending ARPH volunteer, and will not accept the dog if sedated (don't want a bad reaction at 7000 feet). We put the dog in the crate before engine start, and then see what happens when we crank. If the dog really freaked, that would be the end of the flight right there, but so far, there hasn't been a significant reaction.