I second that! lol
Try something milder for awhile and see how it goes.
Eczema is also another thing that crosses my mind, or just extreme dry skin.
I can't shower too often in the winter or my whole body gets like that.
Extremely dry ( winter skin ) gets worse when water is applied...and because the toothpaste is getting around the outside of your mouth, that's a great possibility.
This rash can be due to contact dermatitis or perioral dermatitis. Perioral dermatitis like acne is a chronic papulopustular and eczematous facial dermatitis. It mostly effects women and appear around the nose, mouth and eyes. Treatment consists of oral antibiotics and anti-inflammatory drugs. A mild soap or soap substitute, such as Dove or Cetaphil should be used for washing. Scrubbing should be avoided.
It is very difficult to precisely confirm a diagnosis without examination and investigations and the answer is based on the medical information provided. For exact diagnosis, you are requested to consult your doctor. I sincerely hope that helps. Take care and please do keep me posted on how you are doing.