I think you missed the point about how your horse is building incorrect muscle.
Pulling his head into what seems 'correct' is the reason why
he is building incorrect muscle.
'He is just getting used to this tighter contact.'
Contact is NOT something you take--Contact is NOT MADE by shortening the reins and pulling back on his mouth. This is one of the reasons he's hot--you have a grip on those reins and a flash to prevent him from getting ANY leeway from the bit at all. Contact is not used to prevent a horse from going faster!
Lose the flash. Lose the tight contact. Correct
contact is when the horse takes up the slack in the reins. Do you see how this would be different? You are pulling him into a frame to try and 'force' him to work correctly--instead, he is bracing himself against you, which is creating and making his upside down neck look worse
with work. Dressage--and proper flatwork--is first done with relaxation
. And you don't get that by pulling back on the reins, and 'framing him up'.
I have my own hot chestnut TB, who I used to ride the VERY same way--and I'll show you some before and after pictures to show you the difference correct work has on a horse:
He looks okay here, but note how everything looks 'angular'. His rump looks square-ish and his body is just full of sharp angles. He was in work for several months, being worked 5 days a week, at the time of that photo.
Doesn't even look like the same horse, does it? He is getting less feed that is of a lesser quality then the photo above, less hay, less WORK, but the work is CORRECT. Here is a photo of him under saddle, working on long and low (something that would benefit your horse BEYOND words):
I have a couple of how-to posts on my blog about getting a very hot, forward horse to relax and start taking up correct contact, and working in long and low frames. If this sounds like something you'd be interested in reading, I'll dig up the links for those specific posts. Calming a horse down and getting them to seek the contact is a bit of a 'novel' to post on a forum, so I'd rather just ferry you over to somewhere where I HAVE written it. :)
Your boy has a long way to go, but don't think that having a calm, relaxed, and responsive horse is impossible just because he's 'hot'. 'Hot' is just a state of nervousness and imbalance--fix those things and he'll be right as rain--AND building the right muscles.