Ummmmm...Firstly, watch the REALLY small dog cos he R t3h c00lz. Then in the bottom left corner, click the video titled "Mystery Freaks : Terrifying".
Ok, the caption it begins with assumes it's a joke, every clip suggests it's fake and joke, but I'm just not convinced the reporter is taking it as a joke
(Also, doesn't the mouth-head look like a Slog from Abe?)
EDIT - Actually, after re-watching it, it does just seem pretty funny now