I feel for you, I'm preparing to start training my 25 month old, have done this twice before, but have still been researching techniques. You may have a time frame in mind for your son to be trained, but unfortunately, it really doesn't work that way, and you're stressing yourself out needlessly. The less pressure on him the more he may want to cooperate and please you, too. I promise, he won't be in diapers in college ; )
I'm guessing your son may be rebelling BECAUSE of the 5 month old, which is common. He sees you change his baby brother's diapers and may think, "Hey, I want Mommy to change me!" Some fully trained children regress when a new baby comes along to the point where all their training flies out the window and they're back to being diapered. Your pediatrician called it, he may not be trained for awhile. I read that trying to encourage a child to use the potty like a "big" boy or girl can backfire because this might be exactly what they don't want to hear if they have a new sibling and want the same attention.
He may be being stubborn and asserting himself, but If he doesn't mind sitting in wet pants, he's not staying dry at least a couple of hours in his diapers, pull-ups, or underwear, and telling you when he needs to pee or poop and then doing it in the potty, he's not ready to train. (The best advise I've come across is to pick a weekend, put your child in underwear, and if he or she has a couple of accidents over the weekend and feels bad about it they're ready. If they have several accidents and could care less they're not ready for potty training yet, so pack up the underwear for a few months.) They're really not controlling their peeing and pooping until they're acknowledging it has to be done and doing it in the potty or toilet. And, going commando isn't realistic because he can't go out of the house that way, and it doesn't help him learn not to poop and pee when he's got underwear on.
He's a smart little guy, so I'd tell him since he's acting like a baby he's going back to diapers, like his baby brother. Tell him that when he tells you he needs to go and then uses the potty each time (I'd give it at least 4 or 5 days of him doing this regularly) you will put him in underwear. Be prepared to be consistent and go back to diapers if he "asserts himself" and pees or poops in the underwear. (They can be so strong-willed!) Let him know he won't be in underwear until he's staying dry and not pooping in diapers. Pull-ups are nice because they have the tab so you can check and see if they've gone and re-fasten, but I agree that they are basically expensive diapers, and one of my goals in potty training is to save money! Also, it seems that children feel they can go in them like a diaper and do :-/
Use the things he wants to do to your advantage. If he wants to go to preschool let him know he can't go until he is going potty in the bathroom every time. If he has friends his age that are training and more into it than him or fully trained have him spend enough time with them that he hears they're saying when they need to go and going in the bathroom and not in their pants. He may decide he wants to be like them. Also let him see that Daddy uses the toilet, and have him sit on the potty then, too. (I just read that children learn to go potty best by example from the same-sex parent.) Have him sit on the potty after meals and before naps or bedtime to get into the habit.
Bribes can be tricky as you've found out! Why not try a reward after he does his thing in the potty to reinforce the behavior? Stickers on a chart or one to put on his shirt are fun.
Make time for just him and you. Watch a movie while the baby naps, read a book, or make a snack together. Make it something he can do and the baby can't and point this out to him. Maybe he'd like to help you with the baby by handing you a diaper, or a toy, or getting the baby to smile, and you could tell him what a good brother he is. Keep him close by with a quiet toy or book when you feed the baby. He'll feel special for who he is and might stop refusing to train.
Hang in there, one day, for whatever reason, it will just click and he'll want to use the bathroom rather than going on himself : )