I think time-out is best used as one part of a bigger approach that focuses more on being proactive. At age 3, your son is still working on developing skills like impulse control, communication, identifying his feelings, problem-solving, etc. These are all skills a person needs in order to handle life's frustrations in more appropriate ways. I've found that when it comes to things like aggression, it's really helpful to focus on helping my child learn better ways of coping with those frustrating situations. You may find that it helps to keep track of when he becomes aggressive, under what circumstances. It's likely to be very predicatable, and you'll begin to see a pattern. Maybe he hits his sister when she gets in his space or tries to take a toy, for example, or maybe when he's very tired. Understanding when and why he hits can help you understand what he needs to learn in order to handle those situations without hitting, and how you can prevent some of those situations from occurring. A really good book for ideas about teaching skills is Raising A Thinking Child by Myrna Shure.
I've found that time-out works best as a time/place for a child to calm down, rather than as a consequence meant to deter a behavior. Some people find that having a cozy "calm-down" place helps, I find it best to just have my child sit somewhere near me wherever I am. I also find that the more low-key and neutral we are in giving time-out, the better. In fact in general the more neutral and simply matter-of-fact we are in all our responses to difficult behavior, the better. We've found that more dramatic our own response, the more attention (positive or negative) we're giving a behavior in the moment, the less effective our response is. Better for all of us to calm down, and discuss things later. A simple "no hitting" or "I will not let you hit," along with removing the child from the situation to calm down is all that's needed in the moment. I found that saying "you're angry. I will not let you hit. You need to sit until you're calm," really worked well. On the occasion that one of my girls refused to sit in a specific place after I directed her there, rather than tack on another struggle I'd just stand nearby (but keeping her contained to the general area). She'd flop on the floor and have a tantrum, I'd wait it out saying no more than "we'll talk when you're calm," eventually she'd calm down. The more I talked, the more I tried to make her sit in a specific place, the worse the situation would be.
Another thing I've found helpful sometimes is to do what your dh did in asking your son to count, to sort of move my child from her emotional brain to her thinking brain by asking her a question or asking her to do something (like count, add). Sometimes I would just wonder aloud about something I knew she'd be curious about or want to talk about. I found this most likely to work either before my child was completely overtaken by emotion and flipping out, or just as she was starting to calm slightly. Calming down is such an important skill to learn, as is staying calm when you're frustrated/stressed. I think it's worth spending time working on ways a child can do that, experimenting together and coming up with ideas to try. Cozy corners, counting, blowing bubbles, playing with sand/other sensory stuff, deep breathing...there are so many potential ways to calm down. It can help to have some choices of calming activities handy (but not too many, that can be overwhelming for an upset child).
Keep in mind that he's just 3, so it's going to take repetition for him to learn many things and to replace hitting with new coping skills. Parenting is a lot of lather, rinse, repeat. I think with someone so young you need supervision and as much prevention as is realistic, plus working on helping him learn skills. Time-out fits in there as part of the solution, but it's not (at least ime) *the* solution.
