The sheepskin will help only until it gets dirty. That being said, we used to use sheepskin pads on the cinch (girth) of horse saddles, on the front flank (behind the elbow, the bottom shoulder joint) where the skin is otherwise prone to get sores. Fleece, though, is a lot easier to wash out. Hysson's pack came with fleece sleeves on both girth straps.

Hysson, in my avatar, is modeling an older model Ruffwear Palisades. I love this pack because the pack bags detach from the harness. This makes it much easier to remove the pack bags when we stop. I can carry the pack bags and use the harness to assist Hysson on really bad stretches or when fording deeper streams. Hysson loves it, too, judging from his eager barks when I bring it out!

The Ruffwear Palisades is also less prone to tipping than the first pack I bought, the Kelty Sherpa. The Kelty pack has the bags higher up on the dog's back instead of hanging down on the sides. I find that balancing the pack by lifting each side works fine. If the pack should start tipping to one side, I either move a small item or adjust the water.

The Palisades is a pricey pack, though; watch for sales. I was lucky enough to get a closeout price on an older model. At that point I was looking for a pack that would hold 7-8 days' dog kibble, and (as can be seen from the picture) the pack bags are quite spacious. The newer model has smaller pack bags.
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May your trails be crooked, winding, lonesome, dangerous, leading to the most amazing view--E. Abbey