Girl, I know exactly what you are going through! I have a 2 1/2 yr old and a 6 month old. Olivia went from her baby bed to a daybed right after Owen was born. She still seems to wake up around 2-3am. I am just like you, I do not want her in our bed, that can lead to disaster! It is not easy to stop, I am still haing problems. But what I have done, and I know its not the best thing to do, is I give her about 1/4 cup of warm milk and rub her hair, and in about minutes shes pretty much out.
If she doesn't take a nap that day, its even worse, 3 or 4 times she wakes up in a scream. But another good thing to try, instead of nitelight and christmas lights is, you should go and get one of those fish aquiariums! You know what I'm talking about? It looks like a flat screen with fish in the background and a light and the fish go across it. Oliuvia loves that, its entertaining and a bright nitelight as well.
Good Luck!