Thanks everyone. Some more info:
We do use cloth and have been for about 2 1/2 years. We haven't had any changes to our stash or wash routine in quite a while. Also, DD doesn't have a rash at all, and I do all their diapers together (and her skin is more sensitive). It doesn't look like the pic of yeast rash on the Dr. Sears site. I usually use Northern Essence Better Butter and I put that on it a couple times, but my mom was here visiting and she wanted to get something antibacterial, so she got some California Baby while we were out and I've mostly been using that. It seems to have made it less red, but the bumps are still there and they're kinda blistery.

At first, there were 2 spots on his hips and we thought it was irritation from either the snappi or the corner of the prefold. Then after a couple days, a few more random spots appeared on other places in the diaper area. I'd say there are maybe 8 or so total, and the skin on top sometimes peels off, but I haven't seen any pus or bleeding.
Any idea how to let an almost 3-year-old have diaper-free time without peeing on the carpet?