I have a wonderful loving three year old boy who has been picked at in kindergarten. He is so loving and good that the other boys (all boys kindergarten) found out that they could kick him and do hurtful things to him and he would not do anything back (but does cry instead).
Since this happen and is being dealt with at kindergarten he has started been mean at home and with his grandparents and just anyone who is older than 20 years old. He knows he will not be hit back so he does pinch and kick and hit people close to him.
It happens when ever, he can be hugging you and kissing and laughing and all of a sudden he hits you on the cheek, scratches your nose, pulls on your hear or ears, or he can be running around playing and just having a good time and all of a sudden he runs to you with his fists up and punches you in the stomach etc
I don't know what to do! If I use 1-2-3 method (which we use in other cases with good results) I am affreight that he will never stand up for himself at kindergarten and I do want him to do that, because I don't want him to be bullied all the time (not that I'm telling him to hit the others or anything like that!! ).
Take into account that he just turned 3 and does not understand us fully yet so we can't have a very good talk about this and how he should behave.
Do you have any advice? Am I thinking this wrong? What would you do in this situation?

This is called displaced aggression. Like you said, he can't hit the bullies so he hits people who are safe.

Perhaps invite one or two of the 3 y/os and mothers over to your place for a playdate and coffee or invite them to lunch at McDonald's. Keep it short and observe mothering techniques and children's behavior together and apart. It might be an eye-opening experience!

I found standing myson in the corner helps and telling him that his behaviour is unaceptable and he shouldn't hit because when he does that it hurts people or chuck his toys because if he keeps doing it I won't buy anymore myson is 2years old and is getting the jist of it I'm sure your son will to just because he's 3 doesn't mean he doesn't understand they no a lot more than we think they do

Have you considered switching kindergartens? Or taking him out entirely for a while? At three, he may not be as socially mature as the other boys, leading them to pick on him. A different school may be a better experience for him.