I've been on various narcotics for almost 3 and a half years now. Vicoden was the first one, and I had to come off that cold turkey thanks to a real bozo of a doctor. After that they put me on Loritab, and as of recently they switched me to Percoset.
I take 15mg of Percoset four times a day and pretty much don't experience any of the side effects. At most I feel a little foggy, meaning my memory isn't as sharp as it used to be. Kinda depressing some times to realize how much of my mind has eroded away, but I do brain building boosters and puzzles to try and exerecise that part of me.
Like you yourself stated: Mind over Matter, and the mind is a very powerful thing. You need to find a way to quiet your anxiety over your meds, and certainly your fear. If you go in expecting the worst you may create a self fullfilling prophecy. Not sure if that helps or not, but if you have any questions don't hestitate to ask.
One question I have to ask, as you mention panic attacks/disorder. Are you taking anything to help with that? If not perhaps your doctor can perscribe something that'll help ease you worries, thus helping to improve your quality of life.