Is the coughing truely from the dust or maybe just a response to all the running? Just a thought!
Being directly behind the stock isn't a problem. The dog just needs distance. That comes with experience and training.
Ask your trainer about working along a fence (round pen). That might put you AND the dog on the inside flank of the sheep.
Different breeds work differently but it's not a given that one dog will work exactly like another dog of the same breed.
Your dog sounds like it's doing a great job of driving the sheep. How is it's gathering skills? The two don't always/often go together.
My GSD has a an excellent gather and he's constantly going side to side on the stock in order to keep them with me. As he settles into the routine he will move off to one side of the flock while keeping them on me.
He still works to close and puts a lot of pressure on the sheep. That often has them running over my bony old ass......but he's getting there!

BCs work by coming to a balance behind the sheep. Balance is where ever they need to be to point the sheep in the direction, not necessarily directly behind them.

Teaching them to "come bye" a go "away" (side commands) is getting them to override their natural instinct (with BCs it's bringing the stock to the handler) and move as directed by the handler.

I know with BCs you spend time letting them getting a good feel for the stock and a good sense of balancing the stock to the handler before teaching sides - it's like making sure a student has a good grasp of the ABCs and the letter sounds before teaching them to read. Wearing the stock (keeping them balanced to you) teaches a dog how to correctly respond to pressure for the stock and how to correctly pressure them to get the desired results.

If he is very keen, he may just need to learn how that he can have a bit more space between him and the stock. Sometimes the really keen dogs need to learn that they don't have to be on top of the stock to control them! If he gets a little distance that could help his dust problem.

Thanks everyone for the input! We saw the vet yesterday, who we love! I knew we'd finally found the right guy when he asked us what we fed, and we said that right now he was on Orijen and raw pumpkin (haven't started the raw switch yet) and he said, "That's what I like to hear!"

The results.. Conan does have a fairly good amount of bronchial congestion. Our new vet got all of Conan's medical records from the old one to see what exactly he has done. Which we don't think is very much. He's been on and off antibiotics and I've finally had enough of it and found a new guy to go to! The old one never even did a chest xray. I feel a little like a bad mom since it took me so long to take him somewhere else

Since it's been an ongoing condition he doesn't think it's bacterial or parasitic, but thinks it could likely be allergies or asthma. He went over what he was going to look for once he got the records from the old vet and the different options we had so far. He is very thorough and seems to really care about what is best for Conan and also what's best for our bank accounts. Right now he brought up the possibilities of taking a sample from his trachea or a bronchoscopy but he didn't want to set anything in stone until he got the old records and the blood results on Monday. I was really happy that he didn't give us any meds and didn't try to diagnose him with anything without having any results. They even have grain free treats to give to the dogs that come in!

So yeah.. I think it's definitely a mix of whatever his problem actually is and that he does run really tight on the sheep. I think you're both right, Bob and Mara, that he just needs to learn some distance. We'll keep you updated on his progress both with herding and with his illness! We might have to put herding on a hold until he's better, but I think if he can run cough-free he will really show some skill!

PS. Bob, he's not so great at gathering. He tends to run straight down the middle of them and split them up, then ends up chasing the one or two that broke off. I'm hoping he'll get it in time