Ugh, that's frustrating! Ashley (she used to post here - murphdog) had to have her pittie's tail amputated for similar reasons. She was treating it, but it did end up becoming infected, and amputation was the best option. The dog did fine with the surgery and hasn't had any ill effects from it. But, because Emmie isn't a show or field dog, the length of the tail didn't really matter. We joke she looks like a badly bred Vizsla with a badly docked tail
If you can stand it, though, I would wait as long as possible. Since neutering is in your plans, and if you can hold out, that would be the best time to do it - being anesthetized as little as possible is best. Also, that will give you some time to decide if he is going to grow out of it.
I wonder if a pool noodle would work...?