Opinions vary humping. IMO, humping is not a dominance thing, it is a pleasure thing, but the humpee has to tolerate it. If it's a dog, the humped dog shows submission by tolerating the humping. Stuffed animals generally do not express themselves a lot, so they get humped as needed. Plenty of people here have dogs with a favorite hump toy, but do not tolerate being humped themselves.
Personally, I believe that humping is harmless fun for your dog, so if it doesn't gross you out, there is no problem allowing it, as long as it is directed towards appropriate objects, preferably objects that can be put away when there is company.