On the dropdown menu, when choosing to use the gray jar, you can select any from all owned pets, even babies.  If you pick to use on a pet with no custom skin, the gray jar will be spent anyway (I tried it).

I find it weird, since other items that have specific uses work only in their target kind of pets; like pink fish eggs showing only pregnant pets, or deviance extractors being only for deviants, for mention some.

Definitely an oversight on our side, thank you for reporting! This problem should be gone now. Sorry for the inconvenience.