First off, HUGS to you and your litle ones.
The first two things you mentioned, hitting himself, and the tantrums, IMO, aren't really punishable offenses. The first, he is pretty much punishing himself, and the second, it really is impossible to force someone not to scream. The best advicec I can give you for the above are as follows:
If he is hitting himself, walk away. Don't acknowledge the behavior- just make sure he is in a safe place. As for tantrums, using a soft voice remind him where he is, and tell him it would be easier for you to help him, if he used his big boy inside voice. Try telling him it hurts your ears when he screams, have you tried distraction? Super markets are full of interesting things for toddlers to look at.
As far as preschool, I do think interaction with other children his age would be aplus, but in the long run I think it only puts a bandaid on the issue for a few hours a day. You'll still have to interact with him at home.
It seems he needs to be supervised ata ll times, especially when near his brother. I'd say, if he can't use his gentle hands while with brother, then he can't be with him, and leave the room, or at least separate them to out of touching distance.
What is the cost issue with elimination? It seems that it would be more cost effective to illiminate certain foods. But, I could be wrong, I have been before
I guess my final bit of advice would be...patience. Stop disciplining him, and beginning teaching him with behavior he can copy(not saying you don't I promise ) When he hits or is out of control, stop him and demonstrate appropriate behavior.
Ex: when he hits, stop him and use his hand on the object and say" let's use our soft touches" demonstrate using your hand on him and his hand on object.
I hope I have been of some help, ,and I really hope you find peacec in your situation. It does sound frustrating.