That he's starting to go in his pants, then running to the bathroom to finish sounds like progress. I think you should stay the course, and keep him in underwear. Make sure his bed has a waterproof mattress pad and/or a plastic layer under the sheets. You'll have to do a lot of changing for awhile, but it's better than regressing. Once you make the decision, you have to go with it.
As for nursery school, just give him tons and tons of verbal reminders about making sure he goes potty at school, has to have dry pants at school etc... Try to make sure he goes right before you take him, and maybe he won't even need to go again. My 4 yr old goes every morning before preschool, and I don't think he's ever used the bathroom at school. He's there for 2.5 hours 3x per week. Try not to give him a lot to drink in the morning on that day. Just a few sips of juice or water would be good.
He'll get this! Good luck!