OH I have been there my son says damm it when he drops something. It is embarrassing but I have no one to blame but myself. We try not to make a big deal out of it because he will just say it more if we do. He eventually forgets about it.
My SO can cuss up a storm, DD has only swore once, said "shit", she got a time out and has never swore again. I think she knows the difference, but im sure we will cover that again as she gets older, she is only 22 months. I don't find it cute to see any toddler swearing, its a bit trashy for the parents and honestly it makes me judge them. If your child is not old enough to understand they can't say that, than the parents need to watch their mouths.
I babysat a 2 year old who used the word sh*t. When I told his mom at pick up, she laughed it off.
I try not to use bad language when my kids are in earshot and I haven't heard them use any as of yet. Not saying I'm perfect or anything, just not a big user of foul language. When I was cussing teen, someone told me the only reason people use foul language is because their vocabulary isn't big enough to find a better way to say what they have to say. I took that challenge and have lived that way ever since.