Mouthy much?

So yesterday morning after getting up with Carter, making him breakfast, and watching his morning cartoons with him I decided that I was keeping him home from school so that we could have a "Mommy & Carter Day". Now, those of you that know me know that my schedule sadly hasn't allowed for very many of these lately so I was very excited! So I called to let preschool know and it was official...I had him all to myself for the day :)

It was a wonderful day-we had so much fun. I was just enjoying him and all the things that 2 year olds bring to a Mom's life. Until about Noon-ish. Carter wanted a grilled cheese sandwich so I made him one, cut it into the shapes he wanted, got him his favorite "chocolate nilk" and we were enjoying our lunch together. Now I like to dip my grilled cheese in ketchup-so of course I passed that trait along to my son. So he too, likes do dip his grilled cheese into ketchup (along with just about everything else). So as he dipped his sandwich into the ketchup he got some on his cheek. The rest of the story goes something like this:

Carter: Mom, I need a napkin.
Me: Okay sweetie, let me get one for you. (Proceed to get him a napkin and hand it to him).
Carter: Mom! This is NOT a napkin.
Me: Yes it is Carter, wipe your face.
Carter: NO!!! Throws the napkin and slams his plate on the table.
Me: (Very firmly) Carter-we do not act that way! You don't tell Mommy "No" and you don't slam things down. That is not nice behavior. ( I get up and start doing the dishes from lunch).
Carter: (About 2 minutes later) MOM! YOU DON'T TALK TO CARTER THAT WAY!!! (With his finger pointed at me).
Me: Excuse me? What did you say?
Carter: Repeats above.
Me: Talk to you what way?
Carter: MEAN!
Me: Carter, YOU don't talk to ME that way! You go sit in time out RIGHT NOW!
(He goes over to time out and has a seat. As I sit him down he looks at me and as plain as day says...)
Carter: Mom, it's okay. I forgive you.
Me: (Silently to myself) ARE YOU KIDDING ME? HE FORGIVES ME??? WHAT A LITTLE BRAT! HOW DARE HE?! UGH! What am I supposed to say to that? Who does he think he is?
(Aloud) UGHH! Carter, Mommy won't say she is sorry for disciplining you...blah blah blah blah (don't even remember). All I know is that I was arguing with my 2 year old. Arguing with him. Really? Who does that? So I just trailed off saying who knows what in the kitchen as I finished the dishes.

After time out I tell Carter that he needs to tell Mommy he's sorry for talking to her that way...

Carter: No, it's okay Mom. I don't.

Where do I go wrong? He'll be 3 at the end of May. What's he going to say when he's 6? Or 16? Sheesh! Lord help me!