If you're not happy, and are on the point of losing sanity, it's more than time to get out. You should go ahead and put your resume in for the other job. I wouldn't be too worried about your current employer finding out. There could be a myriad of reasons for your looking for other work, and if they ask, you can honstly answer them (only recommended if you get the other job), or give them some BS answer (something they can't prove, like "you wanted new challenges")
And you arn't being too paranoid. I'd be paranoid too.
Good luck!
