A.,
I am a second grade teacher with a lot of background in dealing with children and I have to say that I feel your pain.
I wrote in a about a month ago about the same concern. As a result, I got a few good ideas that I thought may be worth sharing. We tried them all so I am not sure which one of them worked, but we've had 3 weeks without hitting thus far.
Our son loves to read books with us so we read as many books as he wanted and pointed out that none of the children or characters in the books were hitting each other.
We role played all of the situations that were causing him to hit and talked about them. My husband was the other child who took a toy away from him, or went first when our son wanted to go first etc. I was the mom or the teacher of whom our son could tell the situation or ask for help.
We gave him something else to do with his hands to show his anger rather than hitting. I've actually seen him use this one successfully. Our son folds his arms and pushes them down hard and shows with his face he is angry. This keeps his hands to himself, but shows us and others he is upset.
We have a star chart where he is earning stars for not hitting. He chose the rewards (movie at theater, Chuck E. Cheeses, mini golfing). He gets to chose what we do after earning 10 stars. We even took this a step further and awarded him stars for not hitting back if someone hit him. So we celebrate the times when he keeps his hands to himself. I would encourage you to start with small chunks of time so he feels successful right away.
Last, we told him that any hitting that day would result in no TV or game time for the remainder of that day. We try to limit both of these anyhow, but there are times that our son loves to do them. He loves to watch a show after nap and really loves this time. This was the only thing we could think of that he would care about losing as he isn't really attached to any of his toys. We hesitated to do this because not having the TV on at all would punish the whole family and really sort of focuses on the negative but we were at the point where we would do anyting to stop the embarassment for us and the frustrations for our son.
Our son's preschool teachers assures us that his behavior is normal, but as you know all too well, it is very frustrating for the parent.
About the negative talk toward others. We have a friend who had this problem and decided to use hot sauce. She puts the smallest amount of hot sauce on her finger and then touches her son's tongue. It burns, but seems appropriate to me since he is using his mouth in an inappropriate way. Now I've seen the threat of hot sauce stop the behavior immediately.
I hope even one of these ideas helps you,
C.