To the original poster - if you're uncertain as to how to deal with this, getting a behaviorist or a trainer who is well-versed in how to use positive reinforcement and leadership to stop this behavior would be a really good idea. Even getting them in for a single consultation should give you some good ideas (and explanations) on the how's and why's of this behavior regarding your personal dog. I think it's very possible that it's a combination of the dog having just been ill, having been on medications, not wanting to be disturbed and thinking he has the RIGHT to bite in order to put that across. But in reality, his behavior shows a definite lack of bite inhibition and something needs to be done before it escalates and someone gets seriously hurt.
On the other topics - the problem with discussions like this is that people tend to think of dominance as being a structured set of behaviors that all dogs follow and that's just not the way it is. Dominance is not linear - meaning that it doesn't follow a straight line. It veers off here and there and a dog that may be possessive and dominant in one aspect may be completely accepting in another. For example, Trick is a nicely balanced dog who effectively dishes out discipline to puppies in a way they understand, but willingly gives up her ball or toy even though she really likes her toys. She just goes and gets another one as she doesn't feel so possessive that she needs to defend those toys. But she will growl if one of the other dogs were to try to get into her dish while she's eating. So in some areas she shows more dominance than others, and in ALL areas she is willing to submit to me without any argument. This is a nicely balanced, non-linear type of dominance level.
When it comes to setting rules for your particular dog, in an attempt to make his status less than yours or to make him respect you (there are varied beliefs on the concept of rank, but to me there is are definite rank levels with my dogs and myself) you really have to do what's right for YOUR dog. I usually suggest to people that they try a number of rules and then figure out which ones are working for them and which aren't. For some, this can mean "dog stays off of furniture". For others it doesn't seem to matter. For the problem described in the original post, I would definitely say "off the furniture" while this is being worked on because in both instances the dog was on a couch or bed and that may certainly have contributed to the dog's behavior. Other rules - including having the dog work for all privileges (food, water, attention, playtime, access to outdoors) - will not only help the dog understand that he doesn't run the show, it also will make the people in the family be very aware of how they're interacting with the dog, and will make them understand a bit more as to what creates these behaviors in their dog.
http://www.kippsdogs.com/tips.html - Pack hierarchy, attention training, etc. All very good things to work on.
Every dog is different, and what works for one of my dogs may not work for another of my dogs. I've had dogs that couldn't be allowed on the furniture because it led to immediate challenging of other dogs (but if I kept them off the furniture, we didn't have much problem). I've had other dogs that could sleep on the bed or couch 24/7 and never have a problem thinking that they ruled the place. But if I had a dog that snapped at me while laying on the bed or couch, that dog would FLY off that couch and be relegated to the floor for months, maybe forever.
Love does not build respect. Love is important - we should all have a great deal of affection for our animals - but love alone creates many problems for many dogs. Some people's concept of love is to allow their dog to do whatever it wants, but dogs need boundaries and they need to earn the approval of their people in order to have a level of respect - this is a safety matter as much as anything.
I never make excuses for a dog that bites a person. There are reasons, but if a dog bites as was described in the first post, then that dog does NOT have a proper level of respect and a proper concept of bite inhibition. I don't use illness as an excuse. It may be the reason or one of the reasons, however. Even so, dogs that don't feel well should still understand that biting isn't allowed. It would be different if the dog was in a huge amount of pain (just got hit by a car, etc.) and the person did something to make the pain flare (pick the dog up, maybe). That's why I encourage people to muzzle their dogs if they've been injured, even if they think their dog would never bite them. Dogs are sometimes beyond thinking level when there's shock and pain involved.
On the roughhousing and the growling - some dogs are very vocal, and mine make all sorts of grumbles and growls when playing. They're even allowed to growl at each other, lightly. if there's good cause outside of playing. If I hear a growl I separate the two, giving as much emphasis to the non-growling dog as I do the growling one (because often it's a matter of the non-growling one trying to do something they shouldn't, like crowd the other dog). But my dogs aren't allowed to growl at me or at someone that I tell them is okay - like a vet. And biting is never tolerated. From day one my girls are taught that I have the right to touch them in any way I choose, including reaching into their mouths, into their ears, wiping their butts, handling their feet, etc. I have no problems trimming nails. They don't have to like it, they just have to accept it and when they do they're highly rewarded. It's part of their respect for me, that they have to accept these things, and I don't mis-use my "power" by teasing them or doing things just to prove I can. If I need to trim nails, I do it. If I need to open their mouths, I do it. I use a combination of "do it because I said so" and "you'll get lots of great treats when you let me do this". And, of course, I provide a constant strong leadership that helps them accept whatever I want to do.
One last note: I don't think dogs run around pondering how they can climb the ranks, or become dominant over another dog or person. Dogs simply do what works for them. If they find that growling at a person allows them to stay on their nice soft couch, then growling is what they'll do. It's normal and it's not something that I get worked up about - I just set the boundaries of what I will accept, making sure that my dogs are safe for myself and anyone else to be around, and then I'm consistent in enforcing those boundaries. In essence, I do what works for me, even if it's not necessarily what the dog wants.
Melanie and the gang in Alaska
) and i do not have a problem with Ranks or who is the boss.. they love to be able to strech out and just relax on the couch... they are only just over 3 and 4 months old, and they know that when they should or should not be on the couches.. 
