Have you asked him how it feels when he's doing it? I only ask because the daughter of a woman I know, use to pull her hair and eye brows out. And if you where to ask the daughter why she did it, she would tell you one of two reasons. 1:, it felt good to her, even though it hurt and 2: because the hurt made her feel better, inside.

Her mother told me that in her daughters case and others that she knows of all say about same thing. It has something to do with the outer pain, makes them forget the inner pain.

Counseling and med's was the best help for her daughter, in her case. But even in your case, even if it's different, I would still give it a try. Call the therapist before you go and ask his advice on how to handle making your son feel ok with the therapy, so he doesn't feel there is anything wrong with him, as your worried it might.

Also, I know you said you said something about staying with him till he falls asleep. But you where thinking you might be rewarding his behavior. What about a baby cams? Being that your not with him, he will be more likely to behave normally. This way you can see when it happens, without really being there and if he's doing it before he falls asleep, or at the stage right before sleep or even in his sleep.
This should give you a better clue on when it happens and you can make a better judgment on where to go from there. Also that can give you more info/insite for the Dr's.

I pray it all works out for you and your son.