Right, but on Earth, black hair is neither recessive or dominant, despite being the most common hair color. Two black haired people are certainly likely to produce a black haired child, especially in certain ethnic groups, such as East Asian, but there is the possibility of the combo of another hair color, depending on their genes. A person who is black haired who has a baby with someone of another hair color may or may not produce a black haired child. In Westeros, however, there are a lot of types of magic. And so what is established is that the Baratheons all only produce black haired children, according to the genealogical records that Arryn and Ned research, and all of Robert's bastards are black haired. The Lannisters have blonde hair running through their family, but not all of them are blonde. There are no records produced that say Lannisters only produce blonde haired children. Therefore, when blonde Cersei and black haired always producing black haired Robert had kids, they should have been black haired. Instead, all three are blonde. The key info that Arryn and Ned discover is that the Baratheons always have black haired children. So it's an effective paternity test.
You've got it backward. Dominant traits "hide" recessive traits. No matter how long you breed for a dominant trait, its recessive trait will still appear occasionally. Recessive traits appear less of often but they hide nothing. Blonde is recessive, so in theory it would be possible to have a family of all-blonde people. But, obviously ASOIAF characters can't be expected to know genetics.