Yeah, it's normal behavior. I had a sick honey gourami that I had to remove and treat for a few weeks in a hospital tank. When I put him back I got to see some gourami sparring techinques. Pretty fascinating. Fins flared out, they faced off with each other for a little bit, tapping each other with those little feeler fins. Then they lined up side by side, facing opposite directions, and did the bend in half maneuver. They formed a gourami wheel and spun in a circle like this for a few seconds. Then they broke off and chased each other for a few seconds. That's when the head standing began. They actually did it both ways; sometimes with the head pointing up, others pointing down. Then, they repeated the whole dance again. This only lasted a few hours and they soon forgot all about it. I imagine the same thing will happen with your dwarf gourami. He should calm down, eventually.
Actually, during the height of all this drama, one of the honey gouramis decided it might be a good idea to tangle with my angel (He's about 4 times the gourami's size). So, he raced straight at him, got right in his face and put out his feelers. Then, not a half second after he got in his face, he came to his senses, staring at the angel almost as if he was thinking, "Uh oh........what the hell did I just do?" He quickly clamped all of his fins right up against his body and just kind of slowly backed off and went about doing something else. The angel just looked at him as if to say, "You got a problem, little man?" Funniest thing I've ever seen with fish.
