Does having more muscular arms reduce the chance of tendon/ligament damage from hyper-extension?
My educated guess here is that having more muscular arms stabilizes the joint more (making a dislocation less likely) but actually increases the chances of tearing once a dislocation occurs. I vaguely remember something like this when I dislocated my shoulder.
The important thing to remember is that there are all different degrees of dislocations. Rondo's elbow was only out for a short period of time, and seemed to pop back into place easily. There's almost certainly some degree of tearing and bruising, but hopefully it's pretty minor. Even still, though, it's going to be painful for him.
It can be a pretty major injury, with recovery times ranging (in the places I've looked online) from anywhere between 6 weeks to 6 months. If Rondo is playing, I'd expect a lot of one-handed passes and shots, and not a lot of jumpers.