My daughter has a 1 year old aussie cattle dog that would be exelent for agility but is not akc registerd.

I'm prettu syre they have divisions for muts. I think some of the smartest dogs are mixed breeds.KK

If it is an agility competition run by the AKC, i.e. is an AKC event, then yes they need to be registered. There is good news though. If your dog is an obvious purebred, then after they are six months old and neutered/spayed you can get something called ILP, this will allow you to enter them in agility events, here is the link:http://www.akc.org/reg/ilpex.cfm