Dear TeeTee,
Yes, a two-year-old normally does experience difficulty handling the anger that comes with frustration of wishes. They're still very pleasure-seeking and egocentric at that age.
However, name calling toward parents should be discouraged. Otherwise, this can become second nature. The time out procedure will likely be effective, and my guess is that the problem is not so much with the technique as with the way you are employing it.
If you wish to pursue this, use the SEARCH function in this Forum and you will see many replies about time out. If you follow the prescribed method you will likely achieve good results. And don't forget to focus on the positives as well - i.e., when your son manages frustration without name calling, let him know you are pleased about it.
I want to thank you very much for the quick reply. We really appriciate the help.