S.-
I am a Registered Dental Hygienist and my focus is on periodontal health and oral health education, but the dentist that I work under is extremely proactive in cases like this. I work for a general practice but start seeing children as young as 3. We had the opportunity to attend a 2 weekend CE course on first phase orthodontics and there was a case study very similar to your situation. It was sad to see but the good news is that it's correctable. The little girl sucked on 2 fingers for as long as her mother could remember, I believe she was 2 or 3 years old. This child had the urge to suck on her fingers so much that she developed a horrible rash around the skin above and below her lips. The unfortunate side of this story is that the mother only could afford to help one of her girls out with ortho and dismissed her younger childs needs. Her child without intervention could suffer severe cosmetic malformations of the face, jaw pain (TMJ issues), breathing issues, and or speech problems.
So in my opinion, it sounds harsh and extreme but all you can do is try what your pedodontist is recommending and if it doesn't work you can always look for a proactive orthodontist to help correct any pallatal deformations later. But being a mother of a two year old I would go for the thumb crib first to eliminate future malformation. Being proactive now will keep cost down for the future.
It seems mid-evil but a dentist only recommends this in extreme cases, so if you're comfortable with your provider I would hed his advice. If you aren't comfortable you could always seek another opinion. Don't feel silly about it, people do it all the time in dentistry.
I hope this helps make your decision easier.
Sincerely and good luck,
J.