I feel for all of you!
i also say to read 1-2-3 magic but I ALSO say to read over lots of the pages/articles here, too:
http://joanneaz_2.tripod.com/positivedisciplineresourcece...
also: I may be in the minority here, but I don't really believe in time-outs for under 3. yes you can remove toddler from situations, this is more like 'social isolation' & they do not like it- but a real 'time-out' well, I personally don't believe that you can reason with a 2 yr old (it's hard enough trying w/ a 3 year old! but at least they 'get' it more)
anyway: what I would do is LOTS of telling what hands ARE for. talk every.single.moment and sing and talk and play ALL DAY AND ALL EVENING with words like:
hands are for helping
hands are for holding
hands are for playing
hands are for _________
give LOTS of examples. all.day.long.
they LOVE the story about THEM: once you were a tiny baby who had no words (and no hair? mine were baldies, lol)& no teeth. then you got bigger and you could:__
and bigger and you go some teeth and could eat some food.
fill it in as you go along....
NOW you are SO BIG that you have words! and you have teeth to eat your food! and you have hands for:
over and over and over
AND catch him using his hands the RIGHT way and make a BIG DEAL OVER IT! even if it's eating food & you'd rather him use a fork, hey it's eating food and it's not hitting....