Although I do believe that you son is having teething pain, it seems over the top. My son has dealt with night terrors too, but I would wake him up. I have seen some of the other posts that says not to hold him or anything, but I found that if I woke my son up, he went back to sleep sooner and stayed asleep the rest of the night. The longest it ever took me to wake him up was half an hour. Usually it's only 15 minutes. I never found the teething stuff to work -- any of it. I used the pain reliever. That always worked.
I can't explain the staying up for hours. My other son does that without having night terrors. I just make sure that there is something out in his room that is quiet and he likes to play with. He plays and goes back to sleep on his own. I usually wake up (mommy ears and all) but I don't have to get up and sit with him. I go back to sleep. I do tend to wake up every half hour or so to hear what he is doing because that's just how us moms are but I do get to sleep some.