My 3 year old son is very spirted. He does ...

What you have done up until this point to stop this inappropriate behavior is good. I found with my children that a time-out was the best way of teaching them right from wrong. As cheesy as this may sound, Super Nanny has the right idea about not allowing a child out of time-out until he/she understands and apologizes for what he/she did wrong to be put in time-out in the first place. Consistency is key to eliminating this behavior as well as never giving in. 

I'd also wonder where it is your child picked up this behavior. Is he watching tv that is promoting inappropriate language and behavior? I would suggest in addition to continuing with the time-outs to also pay closer attention to the things your son is doing during his unsupervised time (such as watching tv) to find the source of where he is learning this inappropriate behavior. You likely can eliminate this behavior once you eliminate the source of where your son is learning it. Good luck.

Do not let this get out of hand. If you do not put a stop to this bad behaviour now...it will ONLY get worse the older he gets. Remember....you are the parent. You make the rules in your home.....take away the things he loves to do when he acts badly. Maybe if he misses out on several of his activities...then he will get the picture that you mean business!

We pass on our values to our kids through Communication which is the most important component of any relationship. If we communicate something positive, it brings back something positive to us, and vice versa.
 
Kids can sense the underlying emotion and message of any communication, and react with the same emotions.

If your child doesn’t listen to you, praise him for anything you find good about him and he’ll listen attentively.Few words of appreciation and praise get results where criticism and ridicule fail. If you praise him for the good things he does, he is more likely to do good things again.

But remember! everything has a limit. Over praising a child might do more harm than good.

Here is given a useful link which I think will help you:

http://www.child-discipline-with-love.com/