My cat and dog seem to love fighting with each other. The cat has all his claws and gets the dog pretty good. But its our dense dog that always seems to go after him. Two things... first should I deture these two from wresting with each other AND Second.... last night my dog was nibbling the cat.. hmm I dont know how else to describe it, like how dogs itch with their teeth. He was doing that to the cat and the cat started to purr like crazy and rolling over on to his back more and rubbing his head on the dog. This freaked the dog out so he nipped at him to start another wrestling session but the cat wasnt intrested anymore and swatted at him and ran away to his bed which is under our futon so the dog cant get at him. It was bizzare. This morning they are acting like themselves again wrestling like normal.
It sounds from your message that this is all play behavior and nobody's getting hurt. If this is the case, I wouldn't worry about it. It would be good to keep an eye on it, so if it escalates into something more, you can separate them.
We call the dog nibbling "Nya Nya" after the sound our Boxer made while doing it. It sounds like your cat loves it; now all the cat has to do is get it through that thick dog skull that the cat really enjoys it