I think that's spot on.
Personally, I struggle with the use of 'time-out' when parents are using it to vent their own frustrations, to demonstrate their power and that they are in control. When it's repeatedly used as a punishment for all 'bad' behaviour i think it stiffles growth. The child doesn't see the consequence of his actions and the underlying message is one of rejection.
However, there are times when a child needs to be removed from a situation, not because that is the blanket punishment but because the child needs time and space to calm down or for the safety and well being of others. We also tell our daughter to leave the room if she won't stop interrupting (as in no one else can say a full sentence). Again she is free to come back and join in when she's prepared to let other talk too. In these situations the child might be unhappy being removed but i still don't see it as punitive because it's a consequence of that specific behaviour.