I agree with KSH about getting it checked out if it gets any worse and being careful what else you put on it. If the allergic symptoms are really bad, and keeping you awake at night, it might not be a bad idea to take the Benadryl a little before you go to bed (and then the side effect of drowsiness isn't an issue). As for giving it air, wounds actually heal better when you keep them covered and moist.

EDIT: If you've stopped using the offending ointment and made sure you got it all cleaned off, the reaction should hopefully go away fairly soon.