I certainly wouldn't say it's wrong because every parent does things differently and no two kids are the same. I will share with you how I do time out & you can draw your own conclusions. :)
If my DD would act up, for example, hit Mommy for not getting the doll she wanted.....
I take her to time out, telling her as she sits down why she's there.
If she get's up, the time out starts over, completely.
If she screams and cries, the time out starts over, completely.
Half way through time out, I would remind her why she's there.
Once time out is over (full time spent not throwing a fit or leaving), I would sit down and I would ask her to tell me why she's in time out. Once we agree on why she was there, I have her apologize and then we both say I love you. We hug it out and leave it there.
While yes, time out can be used as a calming moment for the child to gether themselves, that's the lesson you talk about in the time out then. "You are in time out because you will not stop screaming and I think you need a break. Once you can be calm for 2 minutes, we'll talk."
If you give in to the child though and let him get up or let him cry the whole time, like you said, nothing is sinking in. Also, you are teaching him if he throws a big enough fit, he will get his way (out of the time out spot and into the crib already worked).
I hope my insight helps you. I'm sure other moms won't agree but this is the way I do things and I have a very very unspoiled, well rounded, well adjusted 4 year old daughter. BTW, we started time outs when she was like 18 months old. As soon as she was able to understand what "NO" means. LOL! :)