I agree that this situation was not handled well by the teacher. I would also spend some time discussing with your DH privately whether or not there is validity to the teacher trying to make an example out of your child. If you find that both of you agree on that (cooler heads prevail, so try to look at the issue non-emotionally, if possible!) you may want to consider other options............
we have been having this discussion already.... it's sad, we are going to try to make it through this year but we are starting to look for different options in the district.