It totally sucks, and I know how you feel.
My oldest is 7.5 so I also haven't slept well in all these years, she has anxiety, insomnia, SPD, etc... Night time is bad for her and then my 3.5y doesn't sleep well either, and did I mention we have a 1y as well?
Each parent takes 1-2 children in two different rooms and then when DH travels for work, I have all of them in my bed, which equal no sleep for anyone.
We've done melatonin in the past with DD1 when she was 6 and her insomnia was so bad she was sleeping 4 hours a night for over a 6 month period. The melatonin did allow her to go to sleep quickly just like with your DD, but it made her nightmares worse. I have heard that from some other moms on the SN board as well, do you think that might be a possibility?
DD1's fear of being alone is excessive as well, but I can't fight it, it just makes the fear even more intense so I have to find ways to that I can somewhat manage it without going to insane. We ended up doing therapy at a mental health center for DD1, we aren't doing it now, but it was useful to give us some tools and her an outlet for expressing some of her intense emotions that get even more intense at night. She become better at verbalizing why she was so scared in the middle of the night instead of just freaking out. Night time is still rough, it is no cake walk but I no longer feel like I am standing on the edge of insanity either.
No, your gut is right that you can't just leave her in her room, it will just make her fears worse and more intense. She needs to be assisted to gently realize that yes she has fears, but mommy and daddy will help her with them. Bedtime is a highly scheduled ritual at our house because of the "safeguards" that we have to do to help DD1.
Another thought I had was trying to gently work a lovey or object into the picture instead of your breasts and then eventually working towards a pillow placed between the adult and her at night to minimize the touching. Like having a silky blanket tucked between your breasts that she gets used to touching and then moving the breasts out of picture, and then working on getting a long pillow next to you in the bed and eventually between you and her. We did this with DD1, and while it isn't a quick process that has overnight results, it can be worth it in the long run, and coming from another mom who has battled sleep issues for years, we know that nothing is quick with these kids of ours.
I have to go but that is a start of some of my thoughts. Hang in there.