He consulted Great Britain's Olympic eventing coach Yogi Breisner and sent the horse to Collett's Wiltshire stables in December, but
the move proved controversial.
Some critics suggested dressage was demeaning for the champion racehorse, while others felt he should have stayed at the Somerset stables of seven-time champion trainer Paul Nicholls, where he had been based for eight years.
Rider Laura Collett posted this picture of Kauto Star on her Twitter account last week
"There's not one ounce of doubt about what I've done," insisted his owner.
"When I go racing, I meet hundreds of people all over the place. They all ask me about Kauto Star, and not one person has said it was the wrong move to go into dressage.
"There are not many things a retired racehorse can do, and this is a nice, relaxed sport to aim at."
Collett has slowly taught Kauto Star new moves and is in no rush for him to compete after well-received exhibition displays at Barbury and Burghley horse trials.
"It gives him something to do, keeps him active, and gives him a second life rather than being stood in a field.
"He's done some demonstrations and people seem to appreciate being able to see an amazing horse. Hopefully, it's brought people's attention to the fact there is life after racing."
Kauto Star looks different. His shape has changed with different muscles used to perform dressage.
Archive: March 2013 - Kauto Star's new career
"He's a lot heavier than he was because he's not the the fit racing machine he used to be. He's not on the same high-energy food as before," said Collett, 23.
"He now works in a rounder way, whereas in jump racing they need more muscles underneath, pushing them upwards.
"You have to let them build up the right muscles and carry themselves in a completely different way. He's had to learn there is such a thing as cantering, rather than galloping.
"He's very intelligent - you don't have to teach him too many times. He remembers things and they lodge in his brain, which is great.
"Kauto Star definitely loves the crowd and attention, and is a bit of a show-off. But he has nothing to prove and, from the beginning, has been very easy - a lovely horse to deal with. He's taken to it all well."
Smith said his retired two-time Queen Mother Champion Chase winner
is also enjoying a happy retirement from racing, at a farm near Newmarket.
Kauto Star factfile
19 March 2000
Village Star-Kauto Relka (France)
Cheltenham Gold Cup (2007, 2009); King George VI Chase (2006, 2007, 2008, 2009, 2011); Betfair Chase (2006, 2007, 2009, 2011)
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