I have a very similar situation and I feel for you. The tension can really get to you after a while. My male Yorkie, Cash, is turning four later this month and he has a huge problem with dominance. He used to bully my sister's lab (12 years old now) by biting at his ears, snapping at him, etc. He seems to have accepted the lab now, but he still hates the foster pup, Charlie, and he bullies her whenever he can.
My online advice (which I'm starting to implement) is to follow The Dog Whisperer and pick up tips on how to manage a happy pack. I'm moving into my own flat with my three dogs (of whom Cash is the undisputed leader) at the end of the month, so the tension will be over for us, but I'm sure it will really help to firmly establish yourself as leader
