Do you have another cycled tank where you can let your betta hang out for a while? It will reset his territorial behaviors.
I personally love schools of the smaller rainbow fish. Threadfin rainbows and/or Furcata rainbows would be lovely in a 29g. Just be sure to get at least 5 or more, as they very much need a school. In a tank of that size, I'd actually get a larger school of at least 8, though not all at once. :P Seriously, look up some images of them on google, and I think you'll really like them, too. They're hard to find in the chain stores though, if not impossible. You'd need to order online or through a LFS.
If you let him hang out in another tank you can acclimate your rainbows and then add him in afterward.
I'm also a big believer in otocinclus catfish. Those little guys are the most adorable cats EVER. You'll need to drop in some zucchini or some algae wafers for them if your tank doesn't produce enough algae on its own though.