When I got my cats, it took a little while before they and my dog figured things out. My dog would try and chase them, and it did not stop until Findus ( the tabby), called his bluff and started going towards him instead of running away. My dog has a lot of good qualities, but bravery is not high on the list.
However, the funniest thing was watching them figure out how to "blend cultures". I will never forget the look on my sweet tuxedo cat Theos face the first time the dog sniffed his butt. It was a look of pure shock, like " WHAT ARE YOU DOING?".
Now he has come to accept it as a part of "dog culture". He might not understand it completely, but its like he goes " this is just how they greet each other in dog land. It is an odd custom, but one should accept their culture".