>>37609761>Ōtsuki Fumihiko in Daigenkai (1932–1935) proposes that the word comes from kitsu, which is onomatopoeia for the bark of a fox, and ne, which may be an affix or an honorific word meaning a servant of an Inari shrine.This isn't what you said, and is also just one of several competing etymologies.
The oldest version of the word is written in man'yogana, which was a phonetic script.
In any case, the kanji, like most others, came directly from Chinese, so its Japanese etymology is irrelevant. The etymology of the kanji itself is dog + a phonetic component, to indicate its (Classical Chinese) pronunciation.
>And rats are now referred to as 大家鼠.This literally means "big house rat" and I can't find it in Jisho or on Wikipedia.
鼠 (nezumi) alone means mouse, rat, or rodent, depending on context, and happens to be the word used in Cyndaquil's Pokedex entry.