Are you done because of jsl123's less than enthusiastic response? I think many of us are jaded by dermatologists' "certainty" which is later unresolved by their "cures." I am a case in point. My first derm, Dr. Kwak (yes that was her name) gave me the exact same diagnosis as you and was positive Mupirocin would clear it up in "a few weeks," and I could leave the skin on with moisturizer. She was dead wrong, though the Mupirocin combined with a trip to Central America certainly improved my condition briefly, however this was following a second derm's strategy of on-and-off again use of Mupirocin combined with steroids.
She believed the ongoing staph/MRSA infection to be secondary to the main cause, and my hygiene and "perhaps smoking a pipe?" led to my chronic re-infection. However her treatment plan included removing the dead skin at all costs, as it harbored the bacteria and being "ridiculously clean," and she caused trauma to them at the first chance she could get by scraping off the skin with sharp tweezers. She said I could use steroids indefinitely at no significant risk to the skin, which immediately made me suspicious of her credibility, however, in desperation I followed her advice for a year, picking away and slathering on these creams which made my lips white as the driven snow.
Now finally my third derm in two years confirmed the last two were wrong, and diagnosed me with lichen simplex chronicus, with the treatment to "moisturize, leave them alone and resist the urge to pick." My biopsy and swabs confirmed the presence of NO bacteria, no yeast, no allergy, no psoriasis, cancer, leprosy, lichen planus yadda yadda, yet my lips are at their worst in years.
Yet as everyone is different, I couldn't say you and I are the same, so I can't comment on your doctor's diagnosis and prescriptions until we see their full effect. I entreat you to return here with your observations, progress, and consider getting a second, third, fourth opinion if you clear up the infection and your condition remains. For now, take my advice and just don't cause more trauma to the lips than necessary. Bactroban/Mupirocin Nasal should also be considered for mucous membranes even though derms are laissez faire about smearing the cheaper kidney-damaging shit on our lips and say it's "no problem."
Ok, time to go get some Vitamin Daniel, I mean Vitamin D.