Not to be a B***h, but a punishment isn't supposed to be fun. LO getting upset over a punishment (IMO, a fair punishment) is sort of the point. Aside from changing the bedtime routine, have LO write sentences! Not only will LO have an added benefit of handwriting practice, writing, "I will not tell lies." really sinks in! Limiting access to scissors (even safety ones) is always a safe move! Today it was a play outfit, but tomorrow it could be a haircut!
During a punishment, if DS (or SD) begins to cry, I'll pause for a minute to A) evaluate if I'm being way to harsh and B) see if there's another reason for the tears (is SD or DS sleepy, starving, or am I missing something?). If DS/SD is hungry, I'll give them a quick snack before enforcing the punishment. If DS/SD is acting up because they're sleepy, sometimes a longer time out that results in a nap is the cure. If I think I'm being reasonable and SD/DS is just upset over being punished, I can say, "ok let's count to 5 (or 10) and calm down for a minute so you can hear what I'm saying." I can always say, "On second thought, I think it would be better if ..." - there are times when I'm being too harsh and I think it's a good think for me to fess up!