pushing the limits

Tonight was a glimpse of what "pushing the limits" is all about. As we sat visiting with our friend (her little girl, all but asking politely to be put to bed over an hour beforehand), Dylan crawled over to the "NO TOUCH" arena of the fireplace, then looked up at us, smiled, then placed his hand on it. It hit me at once. This little guy knows what he is doing and is seeing how far we can be pushed. In shock, we didn't know what to do but laugh, then redirect him to another part of the livingroom. Now I'm desparately searching for how we should discipline our now ONE year old son - in fear that any wrong decision hereafter will result in a terror of a child that will spur glares from all. I'm scared.
Any suggestions?
Perhaps a time-out space designed only for acts-of-defiance punishment. Ryan and I talked about maybe just putting him in a "naughty chair" (which would actually be the guest high-chair/booster-seat that we have and don't use except for company), or perhaps a gate across the laundry room and let him have a moment to reflect with us out of the line of sight, but still able to watch for safety...
Sigh. How does one decide on what is the best way to teach a one year old? It seems as though the need for such decisions has crept up on us. Eeek.