Spawn-proofing the nether-top sheep farm

Rails prevent spawning. Liquids also do, but they would probably mess with your farm.

Also, most mobs, including pigmen, can't spawn in a 1 block high area. So you just have to make sure that all grass blocks either have an opaque block 2 blocks higher or a rail on them.

Alternatively, you could just cram everything so full of sheep that there's never a full block of space, mobs cannot spawn inside other mobs.

Rails work, indeed - sheep can be bred on them just fine, grass spreads under them and sheep can feed off that grass to regrow pelts, and obviously mobs don't spawn on them - but I found stone buttons to have the same properties while being vastly cheaper.