Since you have pain levels from the previous procedure that are causing you real distress, and since you are quite anxious about proceeding, I would think the sedation, including some amnesia inducing medications (pretty much standard) would be essential for you. Without it, you would be so tuned in to what is happening, extremely tense, which would make the procedure difficult. The greatest pain comes from the pressure of the CO2, and from the deep palpation the doctor's assistants may have to do to guide the scope through those tight turns. If you're tense, and instinctively fighting back, the experience could be traumatic.
Generally, the colonoscopy is fairly easy on the anus itself. The scope is thin, thoroughly lubed, and there is relatively little pressure on or around the anus. The doctor would not recommend the procedure if it were likely to cause injury. Trust him/her, allow the procedure, accept the sedation.
My own colonoscopy experience is quite different - I have had two, and chose no sedation both times so that I wouldn't lose any time beyond the time I spent getting the procedure done. I also wanted to witness the procedure, see whatever abnormalities there might be etc. For me, unless pain is very severe, it doesn't cause me anxiety or psychological distress. My doctor was very open to my preference; the first time, he recommended the IV in case I changed my mind (I accepted his suggestion); the second time, he and I both knew that no IV would be needed. Everything went smoothly both times; it was uncomfortable at times, but never painful. My next one will be done the same way.
The bottom line is that a good doctor will read your reactions, ask about your preferences, and recommend the best course of action for you, specifically. One size, one way of doing things, does not fit all. The doctor's recommendation seems to be a good fit for your temperament and needs, and the type of sedation most commonly used - sometimes called twilight, with amnesia, is quite easy on the system. You will most likely awaken, wondering what time it is, and none the worse for wear.