Interesting! I train GSD's and Belgians, don't know much about Heelers aside that they're in the herding group (had a girl friend with one once, great dog but stubborn!)?
I've found that mouthy dogs need a firm no and a quick redirect into obedience, say some sits, stays, downs, and heeling exercises with stops, circles, and turns etc, and chew toys are only given as a reward for performance. As to jumping, a quick knee to the chest when they jump, and/or a light step on the rear feet will discourage unwanted contact, being careful to not knee or step too hard of course.
To me he was asserting himself by herding you guys LOL, just as my current Belgian Tervuren/German Shepherd mix does to us (though without the mouthiness). It sounds to me that the dog really needed a lot of running to drain some energy, and you thoughts about ball/toy obsession is spot on as it's quite common in shelter dogs (as my Belgian/GSD mix is another prime example, and it's something we have to manage, especially around other dogs excepting her 100lb GSD boyfriend).
It sounds like a farm with some real herding work would be the ideal situation for Micah, hope it works out for him!
Happy New Year everyone!
Rapunzel the Belgian Tervuren/German Shepherd mix and her big German Shepherd boyfriend, Data...