I've had three kids - two natural hospital births, and one homebirth. I'm also a doula.
I can't answer about the Paleo part, as we didn't start that until my youngest was several months old (partially because she had a ton of food sensitivities).
You can definitely have a good natural birth in a modern hospital - my second birth was an absolutely wonderful hospital birth (the first was a not-so-wonderful, though unmedicated, one), and, given free choice, I'd likely choose to have future babies there over a homebirth. However, not all hospitals are created equal. Some have policies very supportive of natural birth (and associated concepts, such as rooming-in and breastfeeding). Others, not so much. While you're legally allowed to refuse any procedure, some hospital's policies definitely facilitate natural birth more than others. You don't want to be fighting the hospital's policies while you're in labor! It's so much nicer to feel safe and supported.
Seriously, I cannot emphasize enough that hospital choice matters, especially if natural birth is your goal. My first birth would likely have been a much nicer experience if I'd paid attention to recommendations and the hospitals' own websites rather than going with the closest hospital.
Medications: Natural birth is, under normal circumstances, the healthiest way for both you and the baby. Medications can have side effects, subtle and major. Natural birth can also be a really empowering, amazing experience. Don't let anyone tell you that you can't do it, or that it isn't worth it.
That said... if you do end up using medication, you're not screwing up your kid or undermining all your nutrition! People are resilient, and many many kids overcome a less than perfectly ideal start.
What I've observed (and studies support) is that mothers are happiest after births where they feel fully in control of and supported in their choices, whatever they may be. And a happy, functional mother is more important for a baby's physical and emotional health than an unmedicated birth.
Know the pain relief options available to you, medication and non-medical. An epidural isn't the only option.
Reducing fear: It is normal and ok to have fears. I had fears going into my third birth, despite having had two previous births of my own, a lot of training, and a fair amount of experience with birth. The key IMO is not to eliminate the fear, but to acknowledge and accept it, but not dwell on it.
I found reading birth stories of all sorts to be helpful. Good natural birth stories were inspiring. Stories of medicated births generally reinforced my desire to have a natural birth. Stories with bad outcomes helped me address my fears. Baby Catcher by Peggy Vincent is one book that I felt really helped in that respect - the stories really run the gamut.
A lot of people find hypnobirthing (usually better with an instructor rather than just the book) or hypnobabies to be helpful. I tried hypnobabies during my last birth, and can't unreservedly recommend it because there were some tracks I found unhelpful and even disturbing, but I do think it was helpful for reducing my fears overall and a lot of people have really good experiences with it.
Midwives: There's really no way to know for sure. Some of it comes down to personality match and circumstances of the birth. But you can tell a lot from the prenatals. Does she take adequate time and attention to listen to and address your concerns? Are you and the midwife generally on the same page? When you're not, does she express her opinion but respect your wishes, or are you having to fight? If you feel like you're fighting every step of the way, labor will probably be the same. What is your gut feeling? Do you "click" well? What is her reputation in the community? What happens if she isn't available at the time of the birth, or you're risked out of midwifery care?
If you have natural parenting groups (online or in-person) and LLL groups are good sources of other people's experiences with midwives and hospitals (LLL can't provide recommendations, but individual meeting attendees can). Mothering.com has a "Finding Your Tribe" forum where you can post asking for recommendations in your area. And your midwife probably knows which hospitals are going to be best for natural birth.
Good luck, and I hope things go well for you!