A Gray Hound resembles an old black-and-white cartoon of a dog. Most are larger breeds, never any smaller than a beagle. They are obviously two-dimensional and move jerkily, as if several frames of animation are missing from every motion. Gray Hounds are usually loners, though rarely packs of them form and rampage across their chosen territory in the Mad City until they anger a more powerful Nightmare, who breaks up the pack.
An individual Hound is terribly dangerous on its own, more than most Sleepers could hope to contend with. Their jerky, uneven movements hide a frightful turn of speed, and their teeth sink into a person's flesh just as well as a real dog's would. The worst part of a Gray Hound's attack, however, is that anyone bit is drawn into the same colorless, two-dimensional existence. As the Hound savages a person, their victim slowly loses all color and substance. If they escape, a victim can eventually heal the harm done, but it's not unheard of for someone to bear some mark of the experience forever after - hair turned solid black or white, a limb turning into a crudely-drawn monochrome outline, or the like.
Savage packs organize around the fiercest, most powerful Hound in a territory. Their presence draws the color out of everything, until the immediate neighborhood is a sea of uniform gray. They tend to patrol the territory in sets of two or three, and drag any kills back to the den for the pack to share - and for the alpha to get first dibs.
The alpha of a pack draws strength from its position, and is mightier than the other Hounds. As well, an alpha has far greater control over its two-dimensional form. While normal Gray Hounds still move and act as if they were three-dimensional creatures, the pack alpha can take advantage of its form to pass through hair-thin cracks and openings. Attempts to escape and hide from the alpha are therefore much more difficult than normal, as only the most perfect barriers can keep them out, and they can take shortcuts impossible to three-dimensional beings.
Rumor holds that the Tacks Man is always interested in acquiring captured Gray Hounds, especially alphas. Nobody's quite sure how to take him up on the offer, and it may not be wise to do so: rumor also holds that he knows how to turn them into new Needle Noses. But the rewards can be great, too - hefty bounties of wax coin, or perhaps a return of something taken in an earlier encounter with the Tacks Man. And what you get doesn't necessarily have to be something that you'd originally lost.