Building blog on expired domain?

As a user if I search for something dog food related and I notice a jewelry domain in the results, I'm much less likely to click it.

Also the existing backlink profile of a an expired domain is what gives it its value. The existing backlink profile for the domain in your example is telling google this site or page is about jewerly. Those links will likey not help very much in ranking for dog food related searches. They may even hurt your rankings, as they may make google unsure what your site is about and be less confident in ranking it for dog food related keywords.

Although I doubt google would give you a penalty, what you would be basically doing is turning a valuable domain into a $10 domain.

I just saw your comment that the owner is transferring it to you. If this is the case it should mean the domain is registered and the domain is not expired. If the owner still has control, it is an existing domain. The domain may have been dropped and someone picked it up and currently has it registered. If it has been registered this second time (or third, fourth, etc) and has been so for a few months, then it should not be sandboxed. Still, you would want to put similar content otherwise you waste the backlinks and Google is confused about your site until you build new backlinks. Also, if it was a PR 1 in Dec 2013, how can this be if it has 10 PR4 links? There was a PR update in December so you would think those links should be accounted for.

My experience with creating a new niche site using an old domain doesn't get you penalized by Google. However, what will happen is that your backlinks that gives your site juice will probably remove their link if the content doesn't match the niche site.. Remember that these links gives authority if and only if its related to your site and doesn't look spammy. Now Google will probably see that your site is about Jewelry and will want some links in the "dog" area.

Like allaboutdomains have said, if you bough it in godaddy auctions/similar and the domain will be transferred to you it means that isn't really expired. And in this case when you go the domain the PR you see is the actual PR (pr tool bar), which is kind of weird with all the links you refer being a PR N/A. Besides backlinks etc check http://web.archive.org to see the history of the site's content.

When going for expired domains, try picking those that are related to your niche as that is the whole purpose of not wanting to start out afresh.

Take the jewelery domain name and make a post about dog jewelery, this will make it relevant to your dog food niche.

maybe you could build massively backlinks to your Jewerly domain and then make a 301 to your money site
if you dont see any movement or lack of response from google just remove the 301
do nothing directly to your money site just qualty WEB 2.0 and other links

just my 2 cents