First of all, I'll point out that we don't have a large dog; landlord has a 30 pound weight restriction.

Our dog is a terrier mix mutt (mixed mainly with chihuahua..looks like there may be a little shizh-tzu in him as well). We've had him since he was 8 weeks old.

He's been through early socialization, and we just finished basic obedience.

The main question I have:

We have three cats. All three cats are larger than he is at this point (he's 5 months old and is 7.5 pounds). Two of our cats like him, and like to wrestle/play with him. On the odd occasions they don't want to play, they just jump up away from him (onto the couch, table, counter, etc..) or they leave the room.

Everything about Woofles' posture when he plays with the cats indicates play, and he has never hurt the cats. If they "yowl" at him, he backs off.
The last couple times he's wrestled with our biggest cat (12 pound tabby male), he growled, barked, and bared his teeth.
He got a swift, hard (as hard as you can correct such a small dog without hurting it) correction with the pronged collar.
He yelped, was unhappy, but was over it in about a minute.
Two days later the same growl/bark/teeth baring thing happened again, with the same cat.
Again, he got a swift correction.
We haven't had that issue since, but was I right in correcting him?
Was he playing and just got a little too into it, or a little over stimulated, or was he showing aggression?

One other question..should this worry me?
The other cat that tolerates the dog is my very sweet, very submissive male (neutered). About 2 weeks ago Woofles saw fit to pin Kyle (cat) to the ground belly down, mount him, place his teeth on the back of the cat's neck, and PEE on him!

That was also met with a swift correction and it has not happened again. In fact, I've been giving him an "AHHH.." every time he gets that 'look' when Kyle is laying on the floor. For the most part, he now leaves Kyle alone. He occasionally sneaks by me and will groom Kyle's ears and face (which Kyle hates, but lays there and takes it), but he hasn't tried to mount him or spray him again.

He also tries to mount the other male (the 12 pound tabby), but doesn't spray him probably due to the fact that the cat is stronger and pretty much flips him right off when he tries to mount.

I asked about it in the obedience class, and the instructor said he was just "showing dominance" over the cat.
Was that accurate?
Since it hasn't occured again, do I need to be worried for the safety (or at least cleanliness) of my Kyle kitty?
Should I correct him for grooming Kyle, or allow him to do that since he's not being aggressive?
FINALLY should I correct him with something other than "NO" when I catch him mounting the other cat?

In the human pack at least, Woofles knows his place. Right at the bottom, me at the top and if he values his nice privleges in the house he'd better not even think of questioning a request..but I'm a benevolent dictator. <img src="/ubbthreads/images/graemlins/wink.gif" alt="" />
He walks loose leash, responds to hand signals and voice signals, can do a few tricks, and we've started working on off leash work.
He is not dog-dog aggressive; his favorite playmates are the neighbor's black lab, and the american staffordshire terrier that lives 3 blocks down.
He gets so excited when he sees another dog (like shaking, whining, 'oh mom please let me get up and play with the other dog
pleasepleasepleaseplease!!!!!??!?!??!') I have to make him go to a downstay coupled with a 'quiet' or he wants to jump at and lick other dogs' faces...this may get him killed some day if another dog takes exception to it, so we work on taking him to open playground nights at the obedience school and practice his 'down stays'.

We're planning to start agility after the first of the year.