Just wanted to comment on this: We experienced exactly the same problem with tea tree oil. We have a 108 lbs Newfoundland (big dog) who has skin problems. Several months ago I had the bright idea of applying some tea tree oil on his skin, without doing any further research. Trust me that was not smart and a very scary experience. I applied maybe 7 or 8 drops of tea tree oil to a cotton ball and rubbed it on the spots that bothered him. Within an hour our big boy had trouble getting up and walking. He literally walked like a drunk and very soon did not want to walk or get up at all. After calling the emergency vet and they did not know anything about tea tree oil, one of the vet techs recommended to wash him with dawn dishwashing liquid to get the oil out of his coat (makes sense, they do the same for birds that are covered in oil). So we did - it helped but it took a total of at least 24 hours for our dog to be back on his feet.
I did look this problem up online afterwards and yes it is a neurotoxin to dogs, so be very careful with it. Some dogs may be ok but I would never ever try this again on any of my animals. So just because something works on humans does not mean it has the same effect on animals, and I usually trust tea tree oil.
Tea Tree Oil Toxic for Jack Russell: I foolishly poured straight Tea Tree Oil on my Jack Russell Terrier's back thinking it may help sooth an itching problem he had. Within a few hours he was paralyzed. He could only lay on his side, and fell over if I tried to help him stand. The Pet Poison Hot Line told me immediately that Tea Tree Oil was a neurotoxin to dogs. They said there was nothing that could be done, it would have to work itself out and he "might" live. For two days my dog layed on his side while I fed him with an eye dropper checking back with the poison hot line. A different representative told us to take him to the vet for fluids, which we did. They kept him a couple days, pumping him full of fluids and he pulled through. From that day on, our JRT immediately shied away from anything that had even the slightest scent of tea tree oil as an ingredient.