When my 8 year old was 3 we did the exact same thing (take away the paci!) but we did not get the same reaction. My daughter was fine. If she had been acting the way yours is I think I probably would’ve caved (in all honesty). Before you took it away did she use it all the time or just at night? My daughter stopped using it completely, except at night, around 12 months. I don’t know if that makes a difference. I would “unplug her” when she got up and “plug her in” when she went to bed. If your daughter was using it day and night do you think you could now just give it back at night? What she is doing sounds pretty traumatic. Good luck, and I hope you ALL get some sleep soon 
Once your daughter started itching, I can totally understand why you gave the pacifier back. I’m sure I’d have done the same thing just to stop her from harming herself.
In my case, I started doing the “binkie snip” with my two year old daughter. She was so attached to having them that I knew that the “cold turkey” method wouldn’t work.
I took a kitchen scissors and cut little bits of the tips away every day. It took less than a week for her to abandon them altogether because they just weren’t satisfying anymore. In fact, she threw them in the trash herself. That was something I thought I’d never see!
Every child is different so what worked with mine might not necessarily work for yours.
I hope you find a method that is right for your family!
Good luck. : )
Thank you to all who responded…we did not end up giving her paci back. I had a long talk with her, if she wakes up and needs something she comes and gets us before getting all worked up. Things are going much better. We were ready to give it back to her but she seems to do better each day.