There's yet another new interview with Dilly on YouTube (it's about an hour long, so I haven't finished), but he goes into detail about why he made Courage pink, and the struggle he had with CN about it:
Basically, his decision for making Courage pink was because he felt the color invoked a softness and innocence that the character was meant to represent. CN wasn't keen on the idea, feeling a pink dog wouldn't sell in a boy-dominated market, and tried to convince him change Courage to another color (like fuschia, for example), but Dilly wouldn't budge. In hindsight, however, he kind of agrees now that making Courage pink was probably a mistake, and admits if he could go back and redo it, he'd probably make him blue instead.