Honestly, this sounds very much like my DS. It's all up to you - obviously you know better then me what he needs, but spending 1-2 hours getting your child to sleep is pretty awful, so it's no wonder you feel so bad. DS was the same and I did it for months.
It was really hard at the time, but the best advice I ever got was to just stop trying. And yeah, he was absolutely wasted and he needed to sleep, but I needed my sanity too. And you know what - it all got so much easier when I stopped trying so hard.
As for the overtired cycle - yep, been there, a great many times. DS transitioned to 1 day sleep around 15-16 months and his day sleeps got so much better from that age (maybe the 1 sleep was a coincidence).