I have no problem with a little bit of spanking. That being said, in line for HM is not the place to do it. If your kid is acting up that much at Disney World, the obvious first punishment is to take them out of the park. Alternatively, if you really don't want to mess up your park enjoyment time, the second obvious punishment option is to take them out of line. This is what I did at California Adventure last year when my daughter started having a meltdown. We were almost at the front of the line, but I left (with her screaming apologies) and took her to the nearest bathroom where we could both calm down.
No reason you should make other guests uncomfortable, either with your misbehaving child or your spanking of them.
Edited: You know, the more I think of it, the more I realize that my way of handling a child-rearing situation is grounded very strongly in my understanding of operant conditioning. Taking away the chance for something desireable (a ride) is just as strong a deterrent (if not stronger) than a physical punishment. I know this from years of training animals (dogs, cats, horses, ferrets, guinea pigs, etc.), but not everyone was a psych/biology major like me. So, its probable that its not tht obvious to other people.