I hate CPAP head! I don't think there is a thing we can do about it...we use the same setup as you and they end up with this tall head and squashed in sides...not attractive at all.
We duoderm the septum and under the nose to help with the breakdown...also helps to keep it in place a bit better.
We aren't allowed to tie the mouth up...we had one kid aspirate because of that (yes, we feed on NIMV or CPAP), so now we just have to adjust the vent to compensate for the airleaking.
We also don't use anything in the nose because most of the ointments aren't water soluble. We do use ParaLube (I think that is the name), it is really artifical tears in an ointment form. Works great to keep the boogies loose and the inside of the nose moist!
We use it on the high flow cannula kids too.
Aren't you guys concerned with the lidocaine in the ointment?