The UK is outside the Schengen zone, so arriving from Britain you will have to choose between 'nothing to declare' and 'something to declare' and it's up to you which one you choose.
Nope, doesn't work like that. You actually have to choose the blue lane when arriving from the EU, and your luggage has a special green stripe to show that you're eligible to use the lane. It depends on the airport as to how it's implemented - for instance, Stockholm Skavsta in Sweden requires you to also pass through the blue lane due to the layout of the terminal when arriving from any Schengen destination.
It's true that many airports mix the blue and green channels, but people arriving from EU destinations aren't required to make any declarations. Where it gets complicated is that someone arriving from New York will clear passport control in the first Schengen area airport they land at, but they are required to make the declaration at their final destination, hence why many airports with large amounts of transit traffic still require people to pass through the Customs area even if they're eligible to use the blue channel.
For what it's worth, the blue channel effectively is a bypass channel of the Customs controls and not a declaration in its own right.
As for "cash sniffing dogs", that's definitely up there with attack dogs stationed at a certain square in Warsaw.