Letting 2 1/2 year old cry it out?

We are having some trouble getting my 2 1/2 year old to sleep for naps and at bedtime. Originally we were laying with him to get him to bed, but that started taking an hour and a half to get him to sleep and we now have a 3 month old so I cant be laying with him for that long because she isn't a super good sleeper yet. Then we started reading him books then just leaving him in his room to fall asleep on his own, he actually did really good at that for about a week and now all of the sudden if we do that same thing he will scream and cry for an hour, maybe even longer. My question is, is it just ok to let him sit in there and scream until he goes to bed even if it's for over an hour? This seems horrible to be but it seems as though he's doing all this on purpose because he knows he'll get his way and we will come in a check on him or whatever. I've also tried phasing out naps thinking maybe he just wasn't tired and if I do that he goes to bed really early and wakes up frequently at night. I dont really have too much of a problems letting him cry it out because I know he's capable of going to sleep on his own but i dont want to tramatize him or have him have a negative outlook on his room or bedtime. and now if he wakes in the middle of the night and he wont go back to bed on his own, he expects my husband or I to sleep with him all night.