I agree that humping is a normal and natural behavior. However, I'd definitely put an end to allowing your pup to hump your arm. As you've said, it's a dominance issue. If you allow him to do it to you, he will do it to others. The longer it's allowed, the longer it will take for him to break the habit.
If you need to tire him out and calm him down at night, there are plenty of other ways.
