magictorch firstly I'm sure you'll be a great mum :) The feelings you're having are very natural and nothing to do with your ability to parent!
FWIW I am still having problems getting my head round the fact that DD is a real person even though she's due to put in an appearance very soon, and I've done this once before already!
When I was pregnant with DS, I held a friend's very little baby. I felt like I was in danger of breaking her, she was so little and fragile. DP on the other hand was a natural, and very relaxed holding her. I thought "oh no, I'm going to be terrible at this!" But when DS arrived it was fine, it really is different when it's your own baby. You may or may not feel a rush of love at first - many people take much longer to get to know their baby for those intense feeling of love to develop and this is absolutely normal too.
About the induction, are you sure you have to be on your back? I was induced last time, (well, technically, "augmented" once labour had started, but it amounts to much the same thing). I did have a MW who wanted me on my back, but everyone else since has agreed that was because of her inexperience with continuous monitoring, rather than an actual need for me to be on my back.
I've discussed this with my MW this time, and there's been no mention of me having to be on my back, if I end up being augmented again.
Do you know why they expect you to be on your back? Is it because of monitoring or because they expect to give you an epidural?
Also, do you know the process for induction? Will they start off with a sweep and/or a pessary? If they're going to use a pessary, does your hospital use "Propess"? If it is Propess, it's fairly effective at kicking off labour from what I've heard, so it's much less likely you'll need the syntocin drip, I wonder if this means an epidural is less likely?
And even if they do give you an epidural, it might be possible for you to get a low-dose or mobile epidural so active labour isn't totally impossible, has your MW said whether this is an option?