Hi B.,
I'm not tearing apart your ways of discipline, but nowadays even the most mainstream parenting advice says no spanking. I'm 38 and I remember the feeling of spankings and it freaked me out. It didn't help me or do anything that I feel like a 3 year old needs (I also have a 3 year old). For one thing, it definitely breaks trust, I remember that feeling too. Also, even though the time out seems like a good way to get a breather for a child, it's not the right thing for every child. http://www.nytimes.com/2009/09/15/health/15mind.html?_r=3. Some kids need someone with them, maybe especially at this age. A 3 year old isn't emotionally mature enough to process why they are acting crazy and doing things they shouldn't be, but we need to be.
Also it might not be a discipline issue. I have a friend whose son was a total handful (well a few friends kids). It turned out that his tonsils and adenoids were too big for their cavities, and he was never getting a good sleep. So he was always semi-sleep deprived and unable to handle himself. They got the offenders removed and she said it was like having a different kid. Another friend who has a younger one that is a handful, it's pretty obvious what they're doing, which is giving that kid sugar and chocolate indiscriminately; a trip to the grocery store with them and he'd bullied his mom into the candy aisle and was filling the cart with candy and screaming when she tried to move on or take things out. She ended up abandoning the venture. And they've never really attended to a lot of his needs in a responsive way; as a baby he never had socks on in the winter, and they'd often just throw a onesie on him and go out while they were wearing parkas and boots. Or help him work through a frustrating process for him, but just let him scream and bang things.
For alternative approaches I've heard really great things about Unconditional Parenting http://alfiekohn.org/tapesdvd.htm, and they have classes based on it at Zenana Spa periodically. Also you could try Positive Parenting http://www.positiveparenting.com/, and the Dr. Sears book The Discipline Book. I have a book called Discipline without Hitting or Yelling that I like. Here's another site with helpful comments: http://www.positivediscipline.com/parents/archive/discipl...
Don't think of these anti-spanking things as judgements against you. When we're caught up in a frustrating situation it's natural to grab at the quickest thing that comes to mind, and spanking has been utilized for generations in our culture. Your post says you're willing to learn, understand, and look at things differently. If you're willing to step back and take time to invest in what these other approaches advocate, I really think it's worth it. There are many studies now that show that positive parenting techniques create a happier child and family. But it's hard to break out of what our culture has embedded in us until now.