I only played the first level, because the hub area of the second level looked the same as the first level, down to the note about the controls, so I thought it as just level 1 again.
It seemed fine.
Toggling sneaking instead of needing to hold down the shift button would be nice.
If there aren't enough cameras to keep the dog in view at all times, maybe level 2 just needs more cameras?
You can have a monster it's hard to see who can jump out and scare you at any moment, like the Grunts in Amnesia:The Dark Descent, but they're slower than you, or they corner worse than you, or something, so it leads to a chase scene instead of a curb-stomp. Or else you can have an unstoppable monster like in Alien: Isolation, where careful observation and avoidance is the only option.
Based on CodyBrealey's comments, The Dog in Level 2 seems to be doing both at once: an unstoppable monster that you also can't see (and therefore can't plan around or evade.)