IMHO, this(revised definition) is a catchup which the clergy (of various religions) play every now and then. Sometimes to meet the new discovery in science, or other times to meet the current human right guidelines.
[1] http://en.wiktionary.org/wiki/spare_the_rod_and_spoil_the_ch...
Finally, KJV is simply not a very accurate interpretation of the texts it draws from. Nor does it take into account more ancient texts which are now available to interpreters and translators. Moreover, translation (while interpretation) does not provide context which is why I pointed you to a reliable commentary series which will provide up to date scholarship on the matter.
I am not saying my interpretation is right but I am saying you will need to do a bit better than just referencing a wiktionary article on the etymology.
Apropo:
תהילים פרק כג' פסוק 4 גַּם כִּי-אֵלֵךְ בְּגֵיא צַלְמָוֶת לֹא-אִירָא רָע כִּי-אַתָּה עִמָּדִי שִׁבְטְךָ וּמִשְׁעַנְתֶּךָ הֵמָּה יְנַחֲמֻנִי
Yea, though I walk through the valley of the shadow of death, I will fear no evil, for Thou art with me; {N} Thy rod and Thy staff, they comfort me.
That proverb is misapplied. When you look at the original Hebrew in context the stick was a guiding stick not a beating stick. A guiding stick is one used for gentle nudges to keep someone on the right path. Basically the proverb is saying: An unguided child is a spoiled child.
Today is is often interpreted: An unbeaten child is a spoiled child. However, this is not the original intent of the passage at all!
I don't have a biblical commentary on me but if you want to check I suggest the Anchor Bible series which generally provide high quality modern scholarship with extensive bibliographies.