Hi H.,
My comments may seem a bit harsh, so I apologize in advance. Your question elecited strong feelings from me. It think it's a really important question. How you handle it will be vital to who this little boy will grow T..
Okay, first: He's TWO. Get a grip. You don't need to agonize over where you went wrong as if this tiny toddler has an irreversibly damagaged character. And doing so, and labeling him as a liar, or bad, at this age will only make him live up to this image. Kids take our labels and adopt them as identities. Developmentally, he really can't even differentiate between reality and fantasy. To a two year old, he doesn't want to have been responsible for breaking something, therefore, he didn't. He wishes someone else was, like his brother, therefore his brother did it. Don't take my word for it, do some study of childhood development. It's important to know how kids think at different stages in life.
REMORSE? Again, he's TWO.. Remorse is not a concept or an option for a two year old. You cannot expect a toddler to think rationally. It reminds me of a parenting advice column I read years ago. The mom wrote in whining, "My two year old is so UNREASONABLE..." Gee, really?
Second, it is important to know that each and every child is unique. Just because your first two boys didn't do this does not mean it isn't completely normal. Unfortunately, just when we think we understand our kids or certain stages and behaviors and how to deal with them, along comes another stage or a child with a completely different personality type to challenge our parenting assumptions. We simply cannot compare children with other children. God gives us wildly different little people to deal with. Our challenge is to figure out who they are and how best to teach each individual child in a manner that works for them and to love them for who they are, not punish them for who they aren't. It's really important that you don't shame this precious boy, but help him to understand reality instead, with plenty of grace.
Count your blessings that your first two were easy to teach in this area. But be assured they they will have differenty challenges in the future. Oldest kids, especially, will tend T. more responsible and eager to please. Younger ones will often not seem as burdened with a conscience as their older siblings. Talk to moms with multiple, older kids and see if this isn't true...
We are all born with a sinful nature, and no one has to teach it to us (ever read "Lord of the Flies?" To expect kids to behave perfectly or as little adults is completely unrealistic and a complete misunderstanding of human nature.
Be patient and keep explaining the difference between stories and real. Eventually he will get it. It will be several more years before you can reasonably expect him to refrain from lying. Even then, this may be one of his challenges. My almost 13 year old daughter is almost always excrutiatingly honest. She can't stand to lie. My 11 year old son, however, seems to feel that truth is flexible (but generaly a very good boy with an irrepresible spirit and a good heart). It wasn't an issue earlier in his life, but seemed to crop up in the last two years or so. We have a lot of disscusions about honesty and integrity and reputation (and plenty of consequences when we have a problem), and it seems to have been making an impact. It's improved a lot in recent months.
Good luck, and God bless! It certainly is a challenge parenting these little puzzles.