crating as punishment

I don't really see the problem of using the crate as a kind of 'naughty step' or time out, when Thistle just gets completely ott , I ban her to the kitchen initially and if that doesn't work I crate her. When the kids are naughty they get sent to their rooms it doesn't stop them from feeling it is their sanctuary and Thistle will still go to her crate when she is tired, and sleeps in it at night, with the door open.

Using it as a time-out area isn't punishment. It's supposed to be somewhere safe and secure, so that if they do act out and need time to calm down, they can do it in there. Punishment crating is putting a dog in a crate specifically to create a negative environment for him/her.

Definitely.

Time out in a crate should be done calmly, quietly & without anger. Otherwise it's punishment & could make the dog dislike the crate.