K.V.
C. C
At the age of 3, I'm going to assume that he's pretty verbal. He's told you already that he's scared of the poo in the potty. Fear is a really strong deterrent to do anything, and what seems silly to us may be very real to him. If I were you, I'd try to dig a little deeper with him. Find out what about it is scary, and then try to squelch that fear once you know what it is. You might even try emptying the dirty diaper in the toilet to show him that all it does is sit in the water until it is flushed. Let him flush it down to make it all gone.
Good Luck!!
K.