Oppositional Defiant Disorder is a bugger. They say it evolves when a child is overwhelmed with anxiety about a choice or a change, feels a lack of control of their situation, that kind of thing. I've worked with these kids a few times. They will shoot themselves in the foot, knowing full well the negative consequences their actions will bring. It is highly self-destructive.
This diagnosis morphs into anti-social when they grow up.
It's not something you can fix with a paddle and a strict bedtime, guys. And if this child in the OP has been diagnosed, you can bet intervention is already on board.
Some of the strategies the OP spoke of--letting the child "get away with it" and not losing your temper--is part of it. If you push against these kids, it escalates extremely fast. Offer a choice if possible, so the child can feel he has at least a bit of control of the situation; it lowers the anxiety level.
It's a rough diagnosis. I feel nothing but sympathy for all involved.