I think that is great that your child listens so intently to every word you say and does not misbehave. I imagine many envy this. Sadly, I have also heard this from parents of children who are like this their entire life and for no apparent reason turn into demon spawns at 16.
I for one believe that children need to learn to be inconvenienced. To hear the word, "No!" To understand that things will not always go the way that we want them to. They need to learn disappointment and shame. If children are not even a little bit rebellious they will never learn how to handle things when the situation turns bad. Or how to handle themselves emotionally when they are disappointed. Children should be allowed in a controlled environment to make mistakes and learn from them. Action/Reaction principles, common sense is established through lessons and mistakes. To me if children are ALWAYS good and never give you any problems. Honestly, that would worry me more then a child who misbehaves a little and needs to be spanked to learn a lesson.
No that is not okay. I do not believe anyone is saying that is okay to harm a child in that manner. If you are describing something that happened to you as a child. Then your father should have made you cleaned up the whole mess in the bathroom. Let grandma destroy one of his favorite toys. Or have him do it. Then make him apologize to his grandmother. And to be quite honest. A three year old does not really need to go into the bathroom alone. So the father/mother should have been upset with themselves as well. I am proud of you for breaking a chain of real child abuse that occured in your past and your wife's past. However, you can disipline a child without appearing out of control to your child and to others.
And I apologize if my post implied my kid is coddled, never misbehaves, and is the perfect angel. He's not; he's seven and makes the same mistakes seven-year olds across time have made. He also sees Mom and Dad correcting his misbehaviour in a controlled and mistake-appropriate manner that doesn't, by deliberate reason, include hitting. You pick your parenting style and I'll pick mine.