I am a mother of  a 2 1/2 year old boy (3 in Nov), he
has always been very sweet and gentle and kind and most of the time,
listened really well...I have raised him on my own since he was born
and have always had my methods of discipline. Now, I am going to be
getting married in 6 months and my fiancee has a son froma 
previous relationship who is also 2 1/2 (3 in Dec)! We were so excited
that the boys were the same age and that we as parents were going
through the same stages with our children. All of this being said, I
have noticed a drastic change in my sons behavior since the two boys
have hung out. My fiancee's son listens to his father immediately, but
he was also very rough with my son in the beginning, loud as well...I
am noticing these are traits that my son is displaying now! And it
seems as though my fiancee has less tolerance for my sons actions than
his own! We have argued this topic over and over again, and seem to
always end up back at square one. I, most importantly, want whats best
for my son, (obviously there are several issues going on here), but
most importantly, how should I handle my son when he gets out of hand?
I have done everything from time out, to getting his park privileges. I
need help!

I don't think that you should handle your son any differently than you did before regarding discipline.  This is a very big transformation for him, as he is sharing you with your fiancee and another KID!  He may be feeling some jealousy. 

Unfortunately the ages of the two boys make it very difficult for them to understand.  You may need to remind him more frequently that certain behaviors are not acceptable.

I just got married almost 1 year ago and we blended the family, a total of 7 children.  I have an 11 year old daughter, 10 year old son, a 6 year old daughter and a 5 year old daughter.  He has a 10 year old son, a 5 year old daughter and a 3 year old son.  We are still working out the kinks.  There is hope.  I promise!

I agree with motherof7. In addition to her comments, you and your fiance should sit down and have a heart felt discussion about how the both of you will discipline your children. Above all, there needs to be agreement and consistency in your household as it relates to discipline. This will help you and your new husband to be on the same page. It will also help the children know what the rules are and the consequences for breaking them.

Even though the chlidren are very young, they are able to understand much. So, just because they cannot verbalize thoughts and feelings doesn't mean that they do not understand thngs like favoritism and inconsistency; but before issues can be worked out, there needs to be agreement between the adults in the house.