I wondered about this when I first heard the story. Sounds like to me the Mom didn't live up to the agreement she signed. At the same time, the school could've dealt with this in a better manner.
The one who is getting hurt in all of this is the little girl, not the mom or the school.
From what I saw on this on TV yesterday in a live interveiw with the mother and a school official, it is the mother that is going pubic. SHE is the one that brought up the issue of not wearing underwear to school, SHE is the one that refuses to quit a job for which she claims shame and accecpt help from the school.
the school seems to have tried to discuss this with her privately, but when she decides to get a lawyer and go public, she is the one who is handling this poorly.