Thanks for the ping; I totally agree with your advice about pecking order, and respecting it. Whichever dog turns out to be the dominant one, (and it sounds like it is the older female), that one should be treated with the respect due to the dominant dog, both in discipline and affection.
We often dogsit for friends' dogs. It is interesting and sometimes amusing to see how they settle these things out. Being bigger or male doesn't necessarily mean that that dog will be the dominant one.
That's true... I've seen little weiner dogs that were far more aggressive than they should be for their size, and the funny thing is, bigger dogs respect them! Go figure :~D