Kitten hemorrhoid

My 13 week old kitten, Toby, has what looks like a hemorrhoid. I have also seen it called a rectal prolapse. I am worried because I have seen that it could be life threatening if it is part of the intestine sticking out, since the tissue could die and kill him. Since he showed up at our house on Jan 1st 2012, I noticed that his rectum looked irritated. I took him to the vet for shots, deworming, blood test for disease, etc.. on Jan 2nd. The vet examined him and said everything was fine.

He began having some diarrhea approx 1 week after I got him and had some vomitting. I took him back to the vet who said he may have eaten some of the christmas tree needles. He gave us flagyl and dewormed him again. I started noticing that he would have blood on his rectum when he pooped and that he had a red lump of tissue sticking out of his rectum, when he was approx 10 wks old. I have seen him poop many times and it is normal (not runny or hard). He also does not seem to be in pain except a little when I would put the cream on it. The vet said to put neosporin on it and said it's not a big deal don't worry about it. He said he would fix it when he was 6 months old when he neuters him. I was still worried because it looks really bad sometimes so I took him to another vet and she gave me a steroid cream to put on it 4 times a day for a week. It is still not any better. Is a steroid cream all he needs or should I insist on the vet doing something like poking it back in and stitching it up? I read that that is what can be done.
I feed him high quality food and 2 tsp plain yogurt for digestion, and water.

Please help, I just want to know if I should get a third opinion or just wait it out. I have a pic of it, but I don't know how to add pics on this site.