Aww is he an Arab? Too adorable. Yes, definitely get out of the tom thumb, and get into a snaffle or double jointed snaffle (so it takes out the nutcracker effect) I prefer loose rings for the cheek piece, but that is totally up to you.
If your going to use a tie down (which I never recommend, but in your case ...) get a nylon one. No bungee action, PLEASE. That can make matters worse. And when properly adjusted the horse will have no choice with his head. I don't advise these because in training horses will rely on it, as will the owners and the horse will lean on it and not work properly.
Let us know what happens!
Dahlia <3 1/4/2012