3 1/2 yr old easily angered with agressive behavior

My son is 3 1/2 years old and I stay home with him.  Recently I have noticed that he is angered easily and when he gets angry his tendency is to push, scratch, hit and kick.  I have been working with him when this happens and I do my very best to stay calm and patient.  I tell him that it's not OK to hurt people and to use his words.  When he gets angry I try to name the feeling by saying something like "I can see that you are frustrated..."  and I let him tell me when he's frustrated with me.  I ask him why and we talk about it.  I just don't know what to do when he does something aggressive to me.  He usually loses a privilege such as going to the park or a particular toy he's playing with but is there a better way?  Time outs don't seem to work, as an only child I'm not really taking him away from playing with others.  Am I on the right track?  Is it just going to take some time for him to learn how to display his anger?  Is this the right way for him to display his anger, saying that he's angry and then talking about it?  He's very verbal for his age.  I was never shown an acceptable way to show my anger so I feel very much out of my element!