E.K.
Oh am I in the same boat!! Ok...here's what I'm doing with my 4mo old, and it's working well so far.
1) Swaddler: My DD hated being swaddled, but can't sleep without it. So, we got a "Woombie" and she love it!! (http://woombie.com/) It keeps her arms away from her face, but she can still move her arms around and even stretch out a bit. Try it! It's been a lifesaver.
2) We did a little CIO with DD (in terms of going to sleep), and she's been totally fine. And she's 4.5 months. We do the cry for 5 minutes, go back in to comfort (without picking up), if still crying, wait 10 minutes and repeat. We haven't done that at night when she loses her paci, but I'm about to start trying it. We knew she was ready for a little kind CIO when I knew her cries. I knew she wasn't in pain; I knew she wasn't hungry; etc. Honestly, she was ready and she did great!
All in all, good luck! I'm hoping for more sleep...for both of us! Message me if you need to commiserate!