Coming in kind of late to the discussion, but found it interesting!

I just happened to attend a herding seminar about a month ago that was run by a really interesting woman up in Canada. She is extremely caring towards all of the animals under her care - including her herding dogs and her stock (ducks, sheep and cows). And she admitted that her schooling stock do not live as long as the stock that just hangs out and grazes, mates, whatever (due to the stress from being "herded" all the time).

So, yes, domesticated animals like sheep used for schooling are under more stress than animals who just get to hang out. However, as the owner of these sheep pointed out - if they weren't living the lives of schooling sheep on her farm - they'd be dinner on someone's plate! It can be difficult to quantify which life is better than another.

One more thing - she was very careful about rotating out the sheep that were being worked by our very novice dogs. The same set of sheep were usually only in the ring for an hour or so before a new set of "volunteers" showed up.

And just for fun - here's a shot of my friend's rat terrier learning how to herd!