OP here, just wanted to post an update in case somebody sees this discussion later and wonders what happened. (I know I always wonder with discussions like these!)
We went ahead and did the IV sedation in the dentist's office after a lot of deliberation. In the end we decided that the anesthesiologist had such a strong track record and so many years of working with children in exactly this setting that we probably were in as good of hands, if not better, than we would be in had we gone to the hospital and used the anesthesiologist there. It also didn't hurt that she was also a board-certified pediatrician. We also followed her suggestions for drugs, including Versed, because in the end we just had to trust that she knew what she was doing.
So how did DS handle it? Only negative was that he screamed for over an hour following the procedure. Why was he screaming? Based on what he told me and what he was doing, he was angry that he wasn't allowed to walk around on his own, and the few times he did escape my arms he then was even more angry when his attempt to bolt failed miserably with him falling over. (The after-effects of the drug made him act very much like he was drunk with absolutely no coordination.) Once the drugs wore off though, and his coordination returned, he was much better. I'm sure it was disconcerting to him to feel so loopy-headed, and I tried to explain to him why he felt the way he did, but I don't think that did much good!
And as for the teeth and his mouth? He never once complained about his mouth hurting; he only complained because the dentist had put this really sticky, tacky, fluoride mixture over his teeth which felt weird. Since he didn't need lidocaine shots to numb his mouth, he also didn't have to deal with the weird "mouth coming out of numbness" feeling, and I didn't need to worry about him inadvertently biting his cheeks or his tongue while he was numb.
So, in the end, I'd say it was a positive experience given the options we had. I think we were fortunate to be in an area with as experienced of an anesthesiologist as we had - I know other areas aren't as lucky, and I feel certain we would have made a different choice had the anesthesiologist been different. With any luck we'll never have to go through this again, though!
Thanks again for all of the suggestions, recounts of past experiences, etc. They really helped!