I never respond to posts, but this one grabbed my attention because I recently was going through a similar situation with my oldest son, now almost 4. (We also live with the MIL.)
My son is very determined. He loves to be in control. For almost two years we've been battling for control. As many books suggested, I gave him choices within boundaries (i.e., do you want ketchup or mustard on your sandwich? do you want to wear the red shirt or the blue shirt?) whenever I could to give him a sense of power. This wasn't enough. He always wanted to choose a THIRD option, one that wasn't allowed. Test. Test. Push. Push. This was his m.o. There were lots and lots of tears (and time-outs) in our house, over and over again. And despite our consistency and follow-through over the two years, he never seemed to "learn" that "this was the way" in our house--"these were the rules." After I finally felt like we were on the brink of crisis, and I simply couldn't keep my temper at bay with all of the needless power struggles and sometimes even violent behavior on his part, I finally sought professional help.
Jeanine Fitzgerald. I was lucky enough to work one on one with her, and attend many of her information sessions. But, she has a book too, called the "Dance of Interaction." It teaches parents how to identify the temperament of each child and helps parents to find a discipline strategy that works with and not against each type of temperament. As it turns out, Time-Outs were the WORST thing you could do do a "high-D" child like mine. (Read the book, you'll know what this temperament label means). And she showed me that not only should I be giving him choices within limits throughout the day (like I already was), but I also should be giving him choices within limits when things go awry (i.e., he hits his brother, he stomps on the cat's tail, he won't eat breakfast, etc.) In the past when things started to get out of control I would limit his autonomy and go straight for the "if you do that again, you will get a time-out." As a D-child, he, of course, would do it again, just to "win." (We both would then lose.)
Since LIVING with Jeanine's book and working one on one with her (she did a personality assessment of him to determine his strengths and weaknesses), I am pleased to say, his behavior has GREATLY improved, his tears have diminished, he plays with other kids/animals better....and maybe most importantly....my parenting skills have improved immensely. (I was very thoughtful, calm, deliberate and consistent in my former approach. So much so that I didn't even realize that I had much room for improvement--a little bit of course--but I thought I was on the right path in general. Then I read her book and was enlightened to some of the "negative" tactics I employed which at times exacerbated the problems.
I still have a long way to go. Positive Discipline is the hardest parenting tactic around!! But, it makes us both better people in the end. I highly recommend Jeanine Fitzgerald!!! Good luck.