Avatar Polymorph has an interesting piece on the ethics of increasing animal intelligence in the current H+ Magazine. Worth a look here.
I see no reason why animals couldn't be boosted to human or even super-human levels. The thing I wonder is how we and they will interact. How will, say, an intelligent cow regard the human race? How will we react when Spot responds to "roll over and play dead" by suggesting you put it you-know-where?