7 yo Aussie/Lab mix and our Newborn

Some background on our 7 yo 60lb Aussie/Lab mix: He's never been a fan of kids below an age that can't show dominance over him, say less that 6 yo. He always removes himself from the situation if he can, like going to the other side of the room or hiding out in a bedroom until the kid leaves.

He also tries to break up confrontations. Say I'm playing around with my wife (non-sexually) and she's laying in bed, if I approach her like I'm going to "attack" her from her side of the bed, he will whine and jump up on the bed and get between us, same if my wife is the "attacker." He's not violent about it. He just tries to break up confrontation. He has no issues when we are having sex though.

Now: We have a 2 week old newborn. We tried prepping our dog as recommended (smelling clothes, playing crying baby sounds, etc). We are trying to keep their interactions between them positive and praise him when he does well. He's curious with the newborn where he likes to lick her hands and her face when we present the newborn to him. We are limiting the licking to her feet because of germs though. He has begun to whine and get between us when we try to pick her up out of the pack-n-play similar to what I described above. The other day I had her in my arms on the couch and he was sitting at my feet. When I stood up with her, he quickly whined, jumped up, and nipped her on the back of the head. He didn't leave any marks so I don't believe his intention was to hurt her.

After some reading, it sounds like we need to do more to establish dominance again because we've been lax on it because he's well behaved. So any time we pick her up now, we make him sit or lay down first and then give him praise for being good. That's been working for a few days but he is starting to whine again after we have commanded him to sit/lay.

Are we approaching this correctly? What else should we be doing?