Croup is nasty for sure! My son's respitory therapist has described it as a virus that takes some time to pass; it enflames the trachea which causes the "seal bark" cough. The inflamation is a real problem because it constricts the airway. My son had pneumonia, croup and influenza at 22 months. He's also asthmatic so we spent some time in the hospital over that. The pneumonia was viral, as is croup and the flu, so there wasn't much they could do for him besides observe and keep him hydrated. Breathing treatments of albuterol and a lot of sleepless nights for mom!
If he is coughing a lot in his sleep, even when he isn't normally sick, you might want to push your doc for a referral to a pulminologist; he could be asthmatic. My sons pediatrician, as are most doctors, was pretty reluctant to just agree with me that asthma was the problem. They never want to put a baby on steroid inhalants unless it's really necessary and they have some solid proof! By the time my little one went in for his second set of tubes in his ears and an adnoidectomy, the adnoids couldn't be removed because he was wheezing too badly to intibate with a general ansthetic. The doctor finally agreed there was a bigger issue at work!
I would show real concern for dehydration. you shoud be changing his diapers as you usually would when he's healthy; if you have less wet diapers than normal there is room for concern. Either way you should get him to the doctor if he's running a fever or showing signs of infection. If he has rapid, shallow breath it would also be a good call to talk to the doc. We battled it out for a little over a month before he got better. Hang in there, I know how you feel! It WILL get better though...