I do recommend that, just as you have done, the pacifier use be confined to the crib, once children have turned a year old. Children can then use it when they want to settle down and go to sleep, they don't use it at all the rest of the day. The only problem with this is that then children truly associate their pacifier with falling asleep, and they almost can't fall asleep without it.
You can break this association, and I would do it abruptly, rather than try to limit the time he is using the pacifier. You'll have two or three bad nights, and then the whole thing will be over. For children of about two or three years, I recommend that you pick a date, and tell your child that he is going to stop using the pacifier because he is a "big boy" now. Remind him a couple of days beforehand, and again the day before.
On the appointed day, collect all the pacifiers, and have your child go with you as you "give away" the pacifiers to a baby. You can use a friend's new baby, a baby from church or preschool -- it doesn't matter, as long as he can see that there really is a small baby. It's best not to have a baby that he will see regularly, or knows very well. Then have him leave the pacifiers in a little bag with the baby (obviously, the baby won't really use these used pacifiers, but he doesn't know that).
You should then go to get some predetermined "reward" (a new older kid toy, a special outfit, etc.). Most two or three year olds will go along with all of this pretty well. Kids under two might have some difficulty actually giving their pacifiers to a baby, in which case you might just want to plan on throwing them out.
The difficulty begins that first night or with the first naptime. The child will get in the bed and then realize there is no more pacifier. You will have to remind him that he can't have it anymore. You won't have to worry about giving in, since you've gotten rid of the pacifiers! It will likely take a good hour or more for the child to now fall asleep, because he doesn't know how to without the pacifier, and needs to learn a new way to fall asleep. Be prepared for tears and screams, but don't scold him, just support him as he works his way through this.
Usually, by the third or fourth night, he will have learned how to fall asleep in a short time again, though don't be surprised if he still asks about the pacifiers. The one thing you have to make sure of is that you don't substitute yourself as the new "object" that he needs in order to fall asleep. You want him to learn how to fall asleep on his own.