I would try (if possible) to give his skin a chance to heal. As much as possible let him run around with nothing touching that part of his legs. Keep him in loose clothing, even at night for now. It sounds like a type of heat rash. You may want to try some cornstarch or baby powder. It way also sooth him if you give him an oatmeal bath. (I believe Johnson's & Johnson's makes one were you empty the packet into a warm bath.) If it still bothers him after a week or so, take him to the doc. It may by a type of skin infection or something like eczama (sp?).
As for the carseat fight, it is not ABSOLUTLY just the rash. He as at the age that he will start asserting his independance. It also may just be an uncomfortable carseat, regaurdless of the rash. My son HATED the carseat that you can carry, but was delighted when we switched to our first Britax. I have a couple freinds that said the switched to a Britax at 1 and 2 1/2 years old. Both said their kids were fighting the car ride because of their seats were so uncomfortable. Both said that when they switched to their Britax, all the fighting went away. We just bought our son the Britax Regent, partly because we know Britax is comfortable, but also because it provided him with the safest long term option for us. He will be able to use this seat, as a 5 point harness, until he is 80 lbs and nearly 5 ft. Considering he is only 29 months and already 3ft 4in (40") and weighs 40 lbs, we went to the extreme. We were not ready to place him in a sholder belt booster seat at the age of 2.
Anyway, if it heals and he still likes his seat, then there's nothing else to worry about. If not, try BRITAX!
Hope it helped, ~J