First things first, you should be asking yourselves how the dog feels about it.
Is your dog getting hard ons while he is on his back? If he is, then would he be comfortable with someone on top of his cock? If it is uncomfortable for him in that position, then he'd probably have trouble getting hard and staying hard. However, its it feels good for him, he'll let you know in nonverbal ways - he'll be basically begging for more.
Now, with that said, have you tried handling his sheath while he is on his back? If you have not tried it yet and intend on doing so, pull back on his sheath, but do it lightly, he'll become avoidant if he's uncomfortable or in pain when you do it.