? Opinion/Thoughts - Dolly or Flatbed Trailer for Dinghy

As stated, you are limited to FWD toads only when using a dolly. You also have to cobble up a running, stop and turn signal light system. You are extremely limited in backing distance.
With a trailer, no limit on backing, built in lighting and braking systems, no wear and tear on the toad. Sets up higher so less chance of road debris damage. Definitely put a hitch on the toad for moving the trailer.