Seaine
Do you know how involved the procedure to remove fatty tumors is? My dog has one right over/beside his eye. He's had it for at least a couple of years, but the past few months he's had eye problems.
[SNIP FOR SPACE]
Luckily for Bob, my dog, he loves getting medicine. He comes eagerly when I'm holding the cream tube, although he does blink when I'm trying to put it in. He loves swallowing pills (I put a dab of sour cream on them) and he loves getting his Frontline put on.
Removal of a fatty tumor (lipoma) is generally not a serious or involved procedure, although given this one's location, it would be more involved than most. If it seems to be distorting the eye, I would recommend removal, particularly if it is changing. It could be causing chronic irritation to the eye predisposing the eye to infection, but I am not sure.
Without seeing the tumor myself, I cannot really say how difficult it would be to remove, but I think it would be something that your general practice vet should be able to do and that your dog should recover well from. Most general practice vets are experienced doing eyelid surgery on dogs, as eyelid tumors are common in that species. So I would not let that bother you. Anesthesia, although never 100% risk free, is really very safe, especially if given with IV fluids.
It sounds like you have a bit of an unusual condition going on with your dog. Over 90% of conjunctivitis (red, swollen eyes with discharge) in dogs is non contagious and is secondary to allergies. There are other causes of red eyes in dogs (such as KCS [dry eye] and glaucoma), but I assume your vet checked for those. But if another dog in the house is affected, unless there is something going on such as remodeling that could be putting irritants in the air, I would assume that there is a contagious cause. I would ask your vet if he or she would consider oral antibiotics. I don't generally use them first time out, but in a recurrent case such as your pet's, I would consider it.
Did the housemate dog recover? Or did his symptoms come right back too? If the housemate recovered quickly and did not recur, the tumor may be a complicating factor in Bob's recovery. If the housemate is having the same course of symptoms, it is less likely.
FYI: Allergies develop over time, so they are more likely in adulthood to late middle age. Also quick changes in climate can also be a predisposing factor in allergies, because the animal is exposed to lots of different allergens.
Please let me know how things go with Bob (one of my favorite pet names).