Ok an update.
First, in regards to DH doing most of the punishment, I would agree with this if I was stepping in as SM at age 16, or 10, or even 5 or 6. However, I have been a part of ss's life for about half of it, he does not remember a time without me here. I am not his mom, I know this, he knows this. However, in his mind, he has his mommy, his daddy, and his Sarah- which he tells everyone, often. At our house, I provide all his meals, his bath time and bedtime routine (by his request), and I am the one constantly coming up with things for either all of us or him and his dad to do together. I also punish him equally with DH. I eased into this all over time, but now it is a standard at daddy's house. DH has, I should say HAD, no idea what to do with a toddler (not that I am a pro). In his house growing up, his punishment was either complete neglect or broken arms and black eyes. He loves his son but was quick(er) to jump to spankings, or rather threatening without follow through, or plain ignoring bad behavior, and getting frustrated with things that are just part of being a toddler (lack of coordination, repetition of everything, etc.). So, while I don't have all the answers, and probably even far less than those of you with full time kids, I am trying to help him understand his son while still keeping things within reason. He was only full-time in his son's life for about 2-3 months (for the first 5 he was stationed in another state, and was deployed for the pregnancy, birth, etc. He left when SS was 8 months old. BM controlled everything DH did in regards to SS, he paid CS since birth, but only saw his son when BM was in a good mood and allowed him to come over for a few hours, at her house, or come by and pick him up to go to the store, or lunch or whatever and then back to her house...until I entered the picture and encouraged him to set up custody orders and actually be a consistent part of his son's life (to say the least, she isn't my biggest fan, nor I hers)). DH and I talk often about what is acceptable behavior, what is part of being 3 (he isn't going to sit still 24/7, or be quiet through whole movies, etc), and what we will not put up with.
All of that being said, I REALLY appreciate all the advice. I think I also read on another post (can't remember which one or who said it) about how with first children/only children we tend to have unrealistic expectations and to stop and consider, if there were 5 children in the room, would this really matter? SS has been with us for a little over a week now, and we have implemented this attitude, along with teaching him how to ask for things, and scaling back on our reactions to his bad behaviors. I have to say things have DRAMATICALLY improved. We have been correcting his back talk with how we would like him to express his feelings/questions/etc. and then ignoring him/telling him we will not respond until he can use nicer words. We have also used the reward system for good behavior, which I did not realize worked so well at this young of an age. He has done VERY well with this when the promise is something he really wants, and we always follow through with the reward when he has been good. Yesterday was my birthday, we went to a nice restaurant with my family, and promised SS that if he was on his best behavior through dinner, he could have a piece of cookie cake when we got home. I have never seen him work so hard at being good for the length of a meal. He has been begging to sleep on the couch to wait for Santa as well. So earlier this week, we made hot chocolate, and explained that we would each get one cup, and if we could sit quietly through the Christmas movie (Elf), then we would all sleep on the couch after just for one night. SS was an angel through the whole movie.
Thank you all for your advice, this week, which was looking pretty gloom at the beginning, has been so enjoyable and pleasant!
And FWIW, SS has only been to time-out once since the last post, for a temper tantrum, which was over in 3 min and on to a wonderful day.