I feel for you.

It's really hard. I know what it's like to be at that point where the behavior crosses the line from annoying or harmlessly disobedient into full-on destructo disobedient. I don't have the answers (wish I did!) but here's what I've been trying.
When "major" disobedient behavior first starts, I stop what I am doing and get down on his level physically, stop him from what he is doing, and sometimes move into a neutral physical space (even a few feet away). I look into his face and ask him to look at me, and then I explain that I do not like what he is doing, why I do not like what he is doing, and that I need for him to stop. I then tell him that if he continues to do X, then Y will happen. Y is usually an appropriate consequence whenever possible, but sometimes it's him spending some time alone in his room to calm down, or he and I going into a different room together to talk further about the situation.
Example...This has happened to us lately regarding cat treatment. Sam LOVES our cats, but lately he has taken to chasing them. They hate it. I tried the relaxed approach, a la, "Sam, stop chasing the cat. He doesn't like that." It didn't work. Now, when I see him chasing a cat, I walk right over, pick him up, and bring him up to his room. I sit on the bed with him on my lap, and tell him "I saw you chasing the cat. The cat hates it when you chase him and he is starting to become afraid of you. We don't want the cats to feel afraid. I need you to stop chasing the cats. (pause) Can you do that for me?" Pause for answer. If no, discuss further. If yes, then I say, "I would like to go back downstairs. Will you be able to stop chasing the cats?" I really am looking for an honest answer from him.

Sometimes he actually says no, and we continue to discuss things. But we don't leave his room until he agrees that he can stop chasing the cats.
I like this approach better than time out.
Tara