Yes! You're in a great position here, I think. He likes to be dominated, but that doesn't mean you have to break out the black leather & whips (though you might find down the road that you want to!) just yet. What do YOU like? Give him a good spanking, then TELL him! He'll comply, and you'll both get what you need!
It is hard to get over that "it's wrong to hit" people thing. I had an ex who never, ever felt right doing it, even if i begged him. Look at his reaction...he clearly enjoys it, and it is NOT the same as hitting someone in anger, IMO. There's a huge difference.