Oh Steph... I can truly sympathise.... Aidyn is a pretty bad nosebleeder too, but it doesnt come from picking his nose all of the time (at least not what I have seen). In some kids the blood capillaries are a lot closer to the surface of the nose, and will bleed very easily without much provoking.
Does your DS get upset when his nose bleeds? You have to cement it in his head that if he keeps picking it, then thats what will happen. Maybe teach him to pinch his nostrils shut (so the blood will clot) and it will stop bleeding a lot quicker (not sure if he is old enough to teach that though - I know Aidyn isnt, and he is 2.5)

I have a horrible time trying to stop Aidyn from rubbing his nose when its bleeding, or straight afterwards, I literally have to wrap him in a towel to pin his arms, otherwise it will just go on for aaages, and we both find it very distressing!
The only other hint I have is to make sure his fingernails are very very short...
I agree that a rewards system for not picking might be a good way to go as well....

GOODLUCK!!!