She’s a ghost monster possessing a child sized doll.

Here’s the creator’s post concerning this.

The “bark bark arf arf” thing was her repeating, in a mocking fashion thus the quotation marks and the wavy wobbly effect added to that particular texts, what the canine units’ had said to her (or perhaps it was a speech by one of them).

Oh and here's Red unhooded and without the mask.