In my opinion yes, you can take a well bred dog and make it mean. I think it has less to do with ass whippings than it does boundries. Furmommies are way more dangerous in this respect than a guy that is hard on his dogs or even misdirected on how he raises it. You can completely ingnore a dog and be way better off than if you baby it and let it push you around.
Depends on your definition of unstable. If by unstable you mean genetically unstable; like say a truely HA dog...then no I don't think you can create that kind of instability. However if you mean behaviorally unstable...then yes, absolutely I agree, environment and experience can influence behavior and undesirable, unstable, dysfunctional behaviors can be learned. The difference for me is that learned behaviors can (if someone is inclined to put in the time and dedication) be unlearned or at least modified through training, counter-conditioning, desensitization yadda yadda...whereas genetic instability is simply physiological...maybe it can be medicated...but it will always be there.