I also agree that at this age they may not know time out concept and end up rocking their chair at the corner or playing afool and that's itself is frustrating. My DS1 did just that when he got timed out at that age.
But I agree setting up a porta cot/play pen solely for the time out is a great idea. At least you can confine the child. Put it at one very boring corner and give him/her 1.5-2 minutes depending on age. Make it very clear to her that hitting isn't acceptable, put him/her in, time, go back to him/her, chat about it and bring him/her to the 'victim', give the victim a gentle rub on the face to teach him/her about being gentle.
I am not sure though if the child can climb out. If he or she screams the house down I will still let her stay there till time is up.
Watch Supernanny? Should be pretty useful?