
1. Never ever try to pull the sheath over the penis ..... it will hurt. Usually a dog will manage to lick himself back in, but very occasionally external assistance may be needed, and unless experienced, I'd always recommend getting a qualified vet to do this.
2. I'd stop him as soon as this activity begins, so he doesn't get that worked up (and blow up!!). You must, as suggested, be gentle with him just in case the dog is going to be used at stud, but even if not, this is a sensitive issue (obviously) so prevention is always best.
3. Now might be the time to up his exercise so he's not quite so 'frustrated', much as most dry humping is down to domination, not something sexual.
4. It's good that your bitch is telling him off because generally speaking no amount of you telling him to quit will be as good as her putting him right with all this, within reason. She doesn't need to be pestered however, and if she is, she might get overly aggressive, injuring him.