What you've described about PMO causing caffeine's effect to become weaker is definitely true. I have spent many many years addicted to caffeine for various reasons.
It was only this year that I reflected back and realized most of my caffeine addiction was because I was always over-fapping over the years, and didn't understand why I felt so fatigued all the time, and I was using caffeine to mask it. Now with new information being obtained, I understand it a lot more and how neurotransmitters work as well as how PMO works into the whole formula.
AFAIK, the only positive effect I've read about and noted about caffeine and sexual function is that it can indeed increase the hardness of your erections, but it's kind of a moot point. If you are in decent mental and physical health, and engaged in sexual activity, you'll naturally become "harder" without needing the aid of caffeine. On the flipside, too much caffeine on a daily basis can cause the opposite effect although it's not as bad as other stimulants like amphetamine where it'll actually be harder for you to maintain a firm erection.
For this there are a few factors to blame, but primarily I would blame vasoconstriction and neurotransmitter imbalances. As far as sexual drive goes, I've always found caffeine to be dangerous for putting one into a PMO loop. Like other stimulants, it can really increase your drive, especially if your "tolerance" has lowered.
Use this as a reason to NOT relapse during your caffeine abstinence period and remind yourself that once you put that caff back into your system, it's most likely going to make you PMO. Despite all this and the sometimes helpless feeling of being unable to function without caffeine, it's very do-able to get off the stuff completely and feel great.
Most of the problem of being addicted comes from dopamine depletion and having little drive to do anything without a "boost. Once you hit that point, make sure you don't give back in to that thought of "hmm, wonder what it would be like if I took caffeine now that I can function well again I'll be even more awesome!
I wish you luck. I've fought the caffeine battle many times and had to stay completely clean from caffeine for about half a year before I could develop the self discipline to not use caffeine inappropriately. Now I only use caffeine in my preworkouts, and have it ingrained as a rule that caffeine is ONLY for workouts, and that's it. I remind myself that if I don't keep caffeine cycled like that for my workouts, it'll lose it's effectiveness. It takes a while, just like Nofap, before you feel the effects but it definitely becomes noticeable and you'll feel way more in control of yourself, and not so "tired" all the time.