Empathy is an emotional reaction to others' situation. I do not see how cutting off access to material things teaches empathy. Self control due to loss of privileges is not the same as empathy nor do I see how it induces empathy.
This is precisely my concern. Still, whatever I said before, DD does have a great deal of empathy. Today she told me that if she ever got very sick (we were watching a program about surgeons, which is a career she is fascinated by) she would run away and hide from me so that I wouldn't have to see how sick she was (i.e., so that I wouldn't feel sad like the family members in the program). When she sees that someone is hurt or upset, she immediately tries to help or comfort them. In fact, I think sometimes that the intensity of her empathy is part of the problem: she feels deeply guilty for hurting others, but she also feels angry about feeling guilty, and it turns into a vicious cycle.
Regardless, DD is no longer a toddler who needs to be taught that others feel pain. She is very aware of that, and has been for years.
Also, I'm not at all sure I understand or agree with your point about nonviolence, but it seems pretty OT, so I guess there's no point in arguing.
