We present everything as a choice - she chooses the action she chooses the consequences. This takes out the "threat" and "punishment" component. i.e. "Do you want to get ready like I asked or do you want to skip the birthday party?" Since she reacts very, very strongly to any negative feedback we found those things to be counterproductive. Asking her what she is trying to accomplish and explaining is also important - she is very sensitive so the idea that she is hurting someone's feelings goes a very long way. i.e. "Why would you say something mean like that to Daddy? Do you want to hurt his feelings?"
DD has always, since she was a baby, put herself into time out if she got upset. If we send her, though, it just escalates the situation. Sometimes if she is being defiant I suggest she go to her room until she is ready to discuss things calmly. Even that is enough to send her over the edge, though, so I pick my battles very carefully...
HTH
