Is "Shut Up" A Bad Word?

Sunday morning W got up from having his breakfast and walked into the living room. I asked him to come back and wipe his face. He ignored me, so I repeated it again. And possibly again... I can't remember.

What I do remember is his response: "Just... shut up."

Matt and I both whipped around and snapped that it wasn't ok to say that to anyone. We asked where he heard it. He had a stunned look on his face and told us it was in Toy Story. We didn't send him to his room or punish him. Just told him it wasn't ok and he agreed not to use it again.

Then Monday night after work he announced that he had to go to the bathroom, so I rushed him there with B under my arm. I sat down with him and out of nowhere he whispered "Just... shut up" then looked up at me and smiled. I pretended that I didn't hear him, smiled and acted sweet, asked him to repeat himself. He clearly rethought it, but the good thing about 3 year-olds is they don't know better and usually do as they're asked. So, he repeated himself. And I put him in his room and told him that my feelings were hurt and he was using a mean word and it was never ok to say it.

He looked at me with those enormous eyes of his and promised he wouldn't do it again. And I have no choice but to believe him and move on.

But, now I'm so confused... Did I give the phrase more power by getting angry about it? If I had simply ignored him, would he have repeated it? Clearly he's playing with words and isn't a bad kid, but he needs to know his boundaries with words. How should "shut up" be handled?