"how do you put lip balm on or lick your lips without the removal of the skin?"
I put on a light layer of vaseline and it doesn't cause it to come off.
"What I have also noticed is that when I am peeling my lips, because of how disgusting they look, they get very inflamed, and grow to about twice the size. What this means to me is that they are slowly healing and I destroy that process."
I have this exact same experience. I am trying hard to let them peel naturally but if I need to go to a work meeting or on a date I'll put a warm washcloth up to my lips for 10 minutes then peel and I have the exact same thing happen. I know it's bad so I try really hard to not do that.
"If you haven't tried bactroban ointment yet, than I highly recommend."
Ironically, a generic form of this was given to me by my doctor 2 years ago when mine first started. Within 3 days my bacterial infection was gone but the lips continued peeling and have been peeling ever since. Last month I got a culture done by a derm. and it can back negative for any type of infection so I think mine is also trauma and my lips trying to heal from when I stopped using chapstick and didn't put anything on my lips for 5 days and they got extremely dry, cracked, chapped and this started and they have never been the same since.
My coping strategy is a daily multivitamin (seems to help but can't prove it), small amounts of vaseline, drinking with straws (I bought stainless steel straws for hot liquids and I highly recommend them), obviously trying not to get food or stuff on my lips, trying not to get my lips wet at all, and trying to get sun (sunlight seems to help). Working out 2-3 times a week also seems to have helped, again can't prove it and no idea why it would.
I've dealt with this for two years and have tried so many different things and been to two different derms to no avail. The next thing I am about to try is using just baking soda and coconut oil mixed together as a toothpaste. My lips seems to get worse after I brush my teeth but I don't know if it's just the water or something in the toothpaste. I did use Sensodyne for 6 months and saw no change but that still has a lot of ingredients in it.
I also think mine might be related to yeast but don't really know how to attack it from that angle. I've looked for anti-fungal mouthwash and haven't been able to find any OTC ones.