I use one of those Kerosene forced air heaters in my 20x20 garage, and find that it works well. I fully insulated the garage with R19, and the part of the garage attached to the house is drywalled. I'll fire it up ten minutes before I get in there, and shut it off after a few minutes of being in there. Its usually very comfortable. I am a part time Firefighter, so I was worried about the CO like you. All the smoke detectors in the house are smoke/co combo, and not one ever went off while I was running it. Also, since I didn't want to dole out a whole bunch for kerosene, I just use diesel as mine is a multifuel.
I was in the same spot you were, but for the price and portability of the thing, I couldn't go wrong. I can't even smell the heater most of the time... But the GF will come in and tell me it stinks in there. She never smells it in the house though. Overall, I would buy another one. Its big enough to warm the garage, and small enough to hoist up into the attic during the summer when I don't use it.
I do love me some diesel fumes though. 8)
Rob L.