I started with Martin the Warrior, which I think probably is one of the best, though I don’t know how much of that is bias because of it being my first encounter with the world. I got pretty burnt out on Redwall near the end and haven’t bothered to read the last several books – tried, but it just didn’t work for me anymore. Which was kind of sad, given how much I loved them for many years and thrilled at the chance to meet Jacques in person back in the late '90s.
At any rate, before this just turns into a Redwall thread…
Tons, really, in both adult and children’s fiction, unless maybe you define “furry” as requiring the anthro characters to be bipedal (which narrows things slightly, but there are still lots of examples in sf).
The fact that books like The Breed to Come and Watership Down exist I think suggests that furry writers don't need to sell themselves short.
True. But I think one thing that sets those kinds of works apart from a good amount of what’s written in furry is that the characters have some reason to be anthropomorphic, whereas in furry there can sometimes be a lot of what I sometimes call “fox in Starbucks” stories, where the anthropomorphism adds nothing to the story (please note, also, I’m saying “story” here, not “plot” – if you can make it important to the plot, that’s even better, but there at least has to be something more than just references to ears and tails for me).
Or maybe I can phrase things this way: as a furry writer, do you see your work appealing to readers outside of the furry community too? Who is your target reader?
In short - yes, and it depends. Obviously, I feel the stories I write that have some story-reason for the anthropomorphism (or that feature ‘feral’ characters) have a much better chance of appealing to non-furry readers… although, ironically I sometimes wonder if By Sword and Star has actually gotten more interest outside the fandom than inside it. (Hard to tell for sure, though, and there may be a lot of reasons for that.)
On the other hand, I don’t know that I necessarily have in mind that I’m ever writing just for the fandom – or at least not anymore. (BS&S might have been written strictly with the fandom in mind, but that’s really the main thing I can think of offhand that I wrote that way, and that was several years ago.) These days I try to not be concerned with what the fandom tends to like or want, even when writing for furry markets, because to do otherwise is too soul-sucking, frankly. (Best example right now would be “Huntress,” my novella that’s coming out in January. I figured if we can have furry novels that have few or no female characters, then hey, turnabout’s fair play, and I’ll write something with next to no male characters. Oh, and the 2 male characters are both love interests. So nyah.) 
It’s possible some might take this the wrong way, but I guess lately I tend to think of myself more as a writer who writes things for mainstream audiences that also appeal to a furry audience, where several years ago it might have been the other way around. If that makes any sense. shrug Anyway, when I can aim for both, that’s my ideal. There’s nothing wrong with writing strictly for the fandom, and if you’re lucky enough to be writing what the fandom wants and can then have some success and build a good readership, that’s great – but at the same time, it is a niche audience and therefore a limited one, and I don’t think furry writers should necessarily feel we have to be confined to publishing within it.
And yes, I do think the large amount of adult material in the fandom can be a potential turnoff, and can make it harder to promote furry writing to wider audiences – if only because it plays into that stereotype of furry being strictly a sexual fetish, and then you have that hurdle to get over. But… past experience tells me those are dangerous waters to get into when talking about furry writing, so I’m very hesitant to get into that topic any further.
