In flat general terms, of course not. Giving heroin to an addict would be unethical, no matter how much pleasure it gives them.
Specifically, in terms of BDSM activities -- humiliation or anything else we do -- it becomes a bit more tricky. In the long run, almost everything we do may be harmful, either physically or psychologically. On the flip side of the coin, though, it can also be amazingly cathartic. i think, it would go on a situational basis.
If the ill-endowed man in your example has sufficient baggage to render him unable to make a reasonable decision on the matter, perhaps you should think twice about indulging him. But if he is fairly well-adjusted in other ways and copes with life in a reasonable fashion, then the responsibility for his own pleasure, and whatever risks of harm comes with it, is his.
Just my tuppence, your mileage may vary.
rose