C.C.
I think your modified time-out is exactly the right approach, and one I used with both of my girls at this age. My oldest went through the "terrible twos" starting at a year old, and same as you are experiencing, it tended to be when she was tired or hungry, and had reached the end of her rope. I don't think she was trying to be bad, it's just that toddlers are like little animals. They are not civilized yet! When they reach the end of their rope, what they really need is to get away from whatever is causing their frustration, so they can pull themselves together again. They do need to be corrected (to be told "No hitting - hitting hurts"), and then calmly removed from the situation so they can cool down.
Hang in there. He will continue to do this until he's 3, probably, although hopefully in that time he will slowly learn to control his temper and will stop hitting, throwing, etc. It took both of my girls until nearly 4 to get to the point where they could consistently control their tempers. Now they just yell at each other. LOL