Hi Kimberly-
I can't help you on the nose issue but I feel highly qualified to talk about the pacifier vs. thumb debate.
My oldest started sucking her thumb at 6 wks old. Days after that, she began sleeping through the night as she could self-sooth without us. My second started showing signs of being a thumb sucker and my husband insisted we use a pacifier instead. It took a while but eventually it worked. I personally hated the pacifier because she would wake up and couldn't find it so she couldn't go back to sleep and would wake me up. I cannot tell you how many months I would wake to her crying, walk into her room, find a pacifier, hand it to her and stumble back to bed. Here are the pros and cons from my experience: The thumb is always available, never gets lost, harder to wean off of and its also often dirty. Pacifiers are easier to wean off but less convenient. Always have spare pacifiers hidden around the house, car and diaper bag.
Eventually, we began making rules like the pacifiers stayed in the crib and could only be used for naps and bed. At about 18 mos. we began telling my daughter about the Pacifier Fairy and how she comes at night and takes the pacifiers away to new babies but leaves a super-cool present. My daughter decided she wanted the Pacifier Fairy to come but it took 2 nights to succeed. On the 3rd night she fell asleep without it. We tossed all the pacifiers and left an elaborately wrapped present at the foot of her bed for her to find. She was very proud of her accomplishment and proceeded to tell everyone about what the Pacifier Fairy had brought her.
My older was still secretly sucking her thumb at age 4- you can tell by the callouses on the thumb from their teeth. Anyway, she fell at the park one day and hit her front teeth HARD. Suddenly, it hurt to suck. That night we put a band-aid on the thumb to remind her and by the time the teeth stopped hurting, she was basically weaned. She was lucky not to lose the teeth but its not a method I'd wish on anybody.
As for long term, my daughters are now 11 & 8 and both see an Orthodontist. Both my husband and I had braces so we knew to expect it. My pacifier daughter currently has a palate spreader but because her father also had one, I can't blame it on the pacifier.
Another interesting note about thumb sucking. Early on, I was convinced my thumb sucker would be left handed based on how she did some things. My brother took one look at her and announced she would be a 'righty' because she sucked her left thumb- you don't suck your dominant thumb. He was right!
Good luck to you!