Help! Puppy pad/outside issue

My 4 mo puppy Sam is fully housetrained on puppy pads. He won't go on the floor, only the pads, which is great for the hardwood floor. However, we want to train him to go outside and the puppy pads are really a problem with this. Even though we reward him like mad when he goes outside, he'll still hold it in during walks and as soon as he gets into the house, head for the puppy pads. I want to crate train him but he's already home alone during the day (from 7:30-12 and then from 1-3:30, give or take a half hour depending on the day) and sectioned off in his area (our former dining room actually) during the night(I have slight dog allergies so he can't be upstairs in the bedrooms or upstairs at all were its carpetted and the allergens build up).

So basically my question is this: Is it okay if I crate him while I'm at work to get housetraining started? Or is this too long to be crated, in which case is there a way I can use both puppy pads (for when he's alone) and going outside (for whenever someone is home)?