Your second... if a child isn't development ready to understand the difference between right and wrong, I still have to stop them from harming another person or another person's property. I can't just say "Sorry, my child isn't ready to comprehend the wrongness of this yet, so you'll just have to deal."
I don't think anyone here would say that. We have an obligation to protect our children and the children they interact with. In my case, I would pull my kid aside and say, "I can't let you hurt him/her." I will sit with him until he calms down and then let him return to the play. If he just won't stop then we would go somewhere else.
Another question in the best regards (because I am a new mom), what do you do if explaining to your child why hitting is wrong doesn't stop him from hitting?
Like I said above, I would remove him from the area. If he did it all the time I would have to be really vigilant about preventing it and try to find out why he was doing it. Sometimes it might even mean not taking him to play dates until he is past that stage.
Sorry I'm typing on my phone. The middle paragraph in the above quote is actually part of my reply. :-)