Bless you! Even if people try to tell you, you can never imagine how hard it is and you have had some really hard problems.
The cracked nipples will clear up in a couple of days with regular breastfeeding and the lanolin. Mine were cracked the first week I had the baby, but I still had my pain medicine from the delivery, so I took that to help with the breastfeeding pain. My pediatrician felt that it was totally ok for my baby to nurse on the cracked nipple, even if it meant ingesting blood (gross, I thought, but ok...).
I was plagued with thrush with my first baby, and it ultimately made me stop breastfeeding. It was the most excruciating pain I had ever felt. However, I think that my doctor would not prescribe enough diflucan and I ate too much sugar. The treatment your doctor is giving you sounds really good and like it should take care of it. Also, check with your doctor, but what worked for me with my second baby was taking a probiotic.
I nursed my first baby to 13 months, and am currently nursing my 23 month old (trying to wean!).
It was very painful, especially at first, and then later when I had mastitis and thrush, but I am very happy I stuck with it. It saved so much money, was so super convenient (no need to pack formula in the diaper bag or prepare a bottle at 3 am) and such a nice bonding experience. I'll always remember my little babies latched on, delirious with happiness and contentment, nursing away...
However, if you and your doctor decide formula is best for your baby, that is ok too! I hate that moms are given a hard time for doing formula. I was a formula baby and my sister was a breastfed baby. I ended up only slightly fatter and less intelligent than her.... Just kidding! I can tell from your post that you are a devoted mom, and your baby will thrive no matter what.
Keep up the good work! :)