Teabagging kids is not acceptable, no matter how you are dressed. 
Parents laughed at this?  
This just absolutely makes me sick to my stomach. How can a parent not find this disturbing?
What are we doing to our youth?  There seems to be little shame in mutilating and/or abusing children. 
If I were a parent there is no way that I would send them to public school.  I would find a way to afford to stay home and home school them.