When a toddler hits, your goal should be to end the hitting--pure and simple. Distracting him, lifting him gently away from the situation, or stepping out of harm's way are all good techniques. Tell him meanwhile in a calm serious tone, "No no no--we don't hit." He isn't going to be able to understand anything more than that. You just need to control the situation calmly so that the hitting ends. Don't worry about apologies, remorse, or making up. When these are meaningless words the adults force you to say, they are worthless. Genuine concern for people comes from the inside. He will notice that the grown-ups apologize and do the same.
Much more important is prevention. Try to anticipate the things that get your son riled up, and head them off at the pass before he boils over. He will be less likely to hit if he feels that you understand him; trying to tune in to his mood can smooth over this difficult phase.
I do not think time-outs help children, unless you are helping the child pull himself together by soothing him with a special "time out" on your lap. Punishment, as you have noticed, just makes children more aggressive and angry inside.