Mike, I had to disagree with you when you said that dogs are smarter than wolves because wolves are nearly extinct, while dogs flourish. The more intelligent species doesn't automatically become the most successful one. Primates are among the least successful creatures on the planet, barring us, and even then, dumber animals that breed prolifically tend to be more numerous (which is the evolutionary definition of success for a species). Bacteria flourish the most of any set of species on Earth.
The scavenger theory of dog evolution is outlined pretty well
here. According to it, wolves that were more willing to hang around human encampments and just scavenge did better than wolves that chose to hunt for their food.
Hunting is not an easy thing to do. It takes coordination among the alpha members (who, in reality are the real driving force behind the hunt; other pack members are superflous: see
this PDF*), which requires intelligence. Hunting, arguably, favors mind power over scavenging from human camp remains, which favors docility, and a lack of fear of humans. I'd say that dogs didn't so much learn to cooperate with humans as much as take advantage of an obvious food source. Cooperation with humans only occurred much later in the dogs evolutionary history. Dogs were at first scavengers, then pack hunters.
Of course, more recent trends have been towards dog intelligence, as they tend to make more reactive and enjoyable pets, but these have not had enough time to really take effect. Most of man's best friend's history was spent scavenging for what we dropped on the forest floor.
*To summarize the article: a wolf packs effectiveness in terms of hunting increases with more members up to the number 2. Beyond that, it has no effect. A pair of wolves (the alphas) are able to take down and kill moose, deer, and whatever else they want to eat all by themselves. However, in doing so, they would lose substantial meat to scavenegers. They can't really eat all their meat fast enough to prevent this from happening. The result is that smaller packs of wolves are forced to hunt and kill more to satisfy their needs than larger ones. Extra, non-hunting members of the pack are just there to help finish the meal fast, so that scavengers like ravens can't get to it. It is better for a wolf's genetic relatives to recieve the left over food than another species, right?