We don't do time-outs. My kids would be devesatated. I think we run our family a little differently though. No rules. No limits on screen-time, no food restrictions. Kids sleep in our room, so no fights at bedtime. If the kids fight with each other, I might suggest that they hug each other. We have lots of conversations about respect, I reflect back what I think they might be feeling (that frustrates you?, are you feeling tired?). High expectations for behavior in public and at home, but not unrealistic or expectations that are innappropriate for age. It works very well for us.
I guess this leaves me with some questions. If a time out would devastate your children how do you plan on helping them cope with school issues? Or do you home school? And how about in lessons outside the home or on playdates when someone might be less than nice, would they be able to handle that? I guess I feel like setting up your home to be completely conflict free might set your kids up for some unrealistic expectations...? Am I missing something?