Ah, been there, done that! I suggest a splint to hold the arm in the position of function while the nerve heals. I really like the HP ones. http://www.handicappedpets.com/walkin-front-splint
If the nerve starts shooting off "funny feelings" while healing, Neurontin/gabapentin can be the answer. If using a splint, you need to watch for irritation from the splint, as well as biting, licking, etc. that might signify that the nerve is "sparking." In my experience, the "sparking" eventually disappears, but it can take awhile.
As for muscle tone, you can do some passive exercises, but it's a given that muscle tone will decrease. It should come back as the nerve does, though.