Ah, co-sleeping. We did it happily until DS got so strong he rolled through the bed-guard. We stopped co-sleeping when DS was 5 months and I think about 18lbs, so had started to take up more space.
To answer your questions, in my humble opinion ... never 'fluff' the pillows, keep them as flat as possible, and don't have any part of your baby resting on the pillow. I would fall asleep breastfeeding, sort of curled around DS so my arm would stop him wriggling up into the pillow.
A baby sleeping bag might be useful. We had a 1-tog and a 2.5 tog I seem to remember, but you can also buy them made of what is basically sheets. This negates the need for foot-to-foot, as the baby can't wriggle down into the sleeping bag and doesn't need to be under the duvet. We had DSon top of the duvet.
Obviously, buy a bed-guard for the side of the bed that is not to the wall. Don't have baby between you and the wall, apparently. I'm not sure why - possibly because they might roll into a potential crack between bed and wall?
As for moving to his own bed. I don't really remember, it was very gradual. DS learned to nap in the cot first, and at 3 months we started to impose a bit more routine i.e. bed earlier etc, and have a nighttime ritual (bath, massage, feed, cot). It worked, though I couldn't tell you how/why! But as far as I'm concerned co-sleeping isn't 'making a rod for your own back' or some such.
Sorry, that was long! Just see how you feel and if co-sleeping makes you uncomfortable or worried, try the alternative.