This looks to me very much like a case of treat the horse and not the numbers - if increasing the pergolide to .8 mg helped, but he is still not quite right, then a trial increase would seem to me to be indicated. (but you somehow have to get your vet on board with this)

Meanwhile, back to the sheath.  Is it painful?  Is the one side warmer than the other? Will he tolerate some cold hosing at the same time as a massage?  That is standard treatment for many types of edema, whether in the limbs or elsewhere.  If it is inflamed fat due to IR, this won't make much difference, but if it is a lymph drainage problem it might help. If it persists or gets worse, you will have to call in your vet (but you don't have to go with the steroids or antibiotics if you know that sets Ulysses back)