I didn't read all of your post so sorry if I repeat something... I've used time outs with all three of my boys starting at the age of two and they worked just fine, I followed the "Supernanny" approach to time outs, I let them know what I expect of them, then if they do what they are not supposed to do get down on their level, get eye contact and give one warning, then if they do it again I place them in TO get down to their level and tell them why you are putting them in TO, then if they get up I tell them to get back in time out as I place them back in time out, then if they get up again I say nothing and place them back in time out, if they get up again I say nothing and place them back in time out, and continue that pattern till they sit the TO, after the TO I release them by asking for an apology (which they must give sincerely, or stay in TO) and I remind them why they were put in TO, with some kids it can take sometime so start doing this when you have the time to follow through, plan an easy day at home to start doing your new TO procedure correctly. I highly recommend watching an episode of Supernanny, as she reviews this on almost every episode, it is on ABC I think and also on the InStyle network, or you might be able to catch episodes online but not sure.
as far as Terrible twos the main problem is communication, a lot of times they can not communicate what every it is that they want/feel/need. you might want to explore if he is able to express himself easily or not, my nephew has terrible allergies that affected his hearing and he was very "two" till they figured it out. another thing that worked well for me is I always gave my kids the expectations that I had, for ex. if I knew he didn't like the bath I would give him the "expectation" I'd say something like "okay son in 10 minutes it will be time to get cleaned up for bed, that means we will either have to take a bath or a shower. you can play for 10 more minutes and I'll come and get you" then when I'd go to get him I'd say "okay it's time, do you want to take a bath or a shower? what toys do you want to take with you?" "can you help me get the water to just the right temperature?" and if he fights it, let him know that it's not okay and if he continues he will have to take a time out on the potty (but if you do TO at this time make sure you have the TO already established and he is relatively compliant, not running off the TO spot)
hope that is helpful in answering your questions, I always try to share the control of the difficult issues by giving them choices, but all choices will include doing what I need them to do... (like "bath or shower," and "now or later" is not one of the choices... it never works!) :)