I've done similarly - ignoring (the boy walking around saying "For fu#ken' sakes!!" at any given opportunity) while he's doing it and then having a chat about why we don't speak like that in our family etc...It was effective for a good while and then the behaviour started again when he started kindy and I took BUzz away. Success! H is very Toy Story motivated though.
I think it's going to be an ongoing thing as the years progress and I'm totally stealing Roopees coffee money idea!