Mast cell tumors can be very tricky and aggressive, However, there can also be happy endings. As your vet has proabably already told you, the removal of these masses is tough as it is best to have at least 3 cm margins. This requires the resection of alot of skin and can make wound healing a challenge. Once the mass is removed, then a patholgist can give it a grade. They are graded on a scale of 1 to 3, one being good and 3 being very aggressive. Often times, with grade 1 MCT , surgery can be curative while grade 3 MCT almost always require some form of post op chemo. Grade 2 MCT tend to fall in between and have seen results on both ends of the spectrum with or without post op chemo.
Prior to surgery, the risk of spread must be considered. That is why there are often preop tests that can be run to rule in/out signs of obvious spread. A general bloodtest can assess organ function but a test called a buffy coat specifically looks for mast cells in the blood stream. IF they are there, this is good evidence of spread. A chest xray can also should a mass in the lung field. MCT tumors do not typically spread to the lungs but they can making this test worthwhile. An abdominal ultrasound can also be done if you want to be extra thorough to look for evidence of spread to the liver, spleen, etc. The problem with this test is the expense.
With or without surgery, I also like to use a antihistamine (bendryl) with H2 blocker (pepcid AC). This can slow the spread rate (I have also seen it shrink a mass a little) and can help wound healing post op.
The description of your dogs mass sounds like it could be removed without too much wound closure issues. However, this is still an undertaking and your dog will need to recover (although they handle this much better than you would expect).
If you chose not to do surgery, there is nothing wrong with this choice as he is an aging dog and you will not know prior to surgery what the grade of this tumor is unless your vet does a biopsy first (which means another procedure). He may do fine for a while, but with the recent growth, I have concerns.
As for the tooth, if the tooth is not giving him major problems, then let it go for now. I am more worried about the cancer than a tooth. However, if you decide to have surgery performed, or of it is bothering him, then consider having the tooth addressed. My brittany has two chipped K-9 and am leaving them until she shows me a problem.
I hope this helps and gives you some direction