[quote=ishtar]
1. am I right in summarizing that basically the animals mutated to humanoid creatures and after a period of time they banded together to avoid from being eradicated by human? 2. what would the animal kingdom settlements be like? In the wilds like cavern, on trees, underground and such, or would they build houses like humans do? 
3. You mentioned about cats, dogs and insects, how about the avian? 
4. Maybe some of them mutated to harpy like creatures or like human with wings (I'm thinking like Hawkgirl from the comic) ? Err... sorry for the barrage of questions. .__."
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1. Yes. Well, quite a bit of the animals. Some like the bears think they're too good for allies and some joined the evil animal group that wishes both human and animal to be conquered. Some animals, although rare, are just too disliked, too out of the way, or too stubborn to join.

2. They inhabit all kinds of places, a lot of them in hiding to avoid direct confrontation by the humans. If the humans ever find their cities then they're in big trouble because a lot of the animal civilians couldn't put up much of a fight, such as the caterpillars. That being said, all of your suggestions would be prime locations depending on the animal in question. All animals who prefer forests would group in forests, all who prefer underground would group in the underground sections of the forest, etc. Being intelligent they are able to leave their natural habitats with more ease so you can see some where they don't normally belong if they have a reason to relocate. They would have houses, mostly out of wood, leaves, and other natural materials. They don't want to put too much work into things if they have to run away at the first sight of a human invasion. However, some cities are more "stand and fight" in nature, being huge and having massive walls able to hold out even the really larger (to them) humans.

3. I think the insects would be afraid of the birds, but there would be plenty of good birds so that would help change the insects minds not to fear them as much. Well, the bad guy insects have even more reason to fear them. They'd be the main way to take out the enemy insects. Speaking of birds, crows and vultures can be on the evil animal team. 

4. It's not like they are human looking but with wings and a tail. Rather then that they are animal looking but have a stature more like humans and sometimes with opposable thumbs and other useful qualities. If they were to look like Hawkgirl, how about a child from a human and animal pairing? That would be rare for multiple reasons but possible.