I hope you get lots of positive comments here, kitten_Val, since I'm in about the same boat: Green horse, experienced rider but green to dressage. My guy is little, too, at 14 hands even, with a relatively "pony" type build. Certainly not the average warmblood
I've always read, heard, and been told that any horse can do at least basic dressage, and that the concepts and work ethic of a dressage foundation can benefit any horse. The problems with horses "doing" dressage come when the specific horse/pony's conformation start interfering with more advanced maneuvers. IMHO, any horse can learn to improve his/her "posture," accept the aids, and perfom the basic arena figures in a calm, rhythmic manner, if you follow the training scale at the horse's pace, and have a knowledgeable eye on the ground to help you both stay on track.