They may not be able to do as much damage, but their bites sure hurt like heck when they want em to.
I have never really had a problem with the dominance issue with my macaw. He is allowed up on my shoulder unless he is in an excited mood. I can read him pretty good though... I wouldn't trust one I didn't know up there. Mostly he just sits on my arm or hand (his choice).
He did get me pretty good one time when he was on top of his cage (which is pretty high). He didn't want to come down so when I went to get him to step up, he nailed my ring finger pretty good.
