I suspect the principal's real motives were to prevent a race riot, which would inevitably happen as soon as a student of one race called a student of another "stupid".
And you know they would.
The bottom line for school administrators is not "justice", it is "maintaining good order and discipline", which I might add is the same justification used in the UCMJ for soldiers.
As far as the "rights" of students go, in truth, minors do not have full civil rights, they only have an extrapolation of their parents' rights. That is, if their parents wish to confine them in an institution, the children have no right to assert habeus corpus before a judge.
In the case of a school, which operates "in loco parentis", or "in place of a parent", in many ways, *its* prerogatives generally outweigh the students' rights. This changes when a parent enters the fight to assert the parents' rights, and the only thing left that the school can do it to say "either they do it our way, or they go to another school."
However, because these cases have been heard continually around the country, there have been many bad judicial decisions based on a flawed understanding of the law, usually forcing schools to respect some contrived "right" a student has to do something disruptive or potentially so.
There is another option, an external to the school website. There they would be perfectly free to cover stories the princpal would rather they did not, have postings etc. All beyond the legal reach of the school.
Some schools have tried to suppress this in the past. The result has been lawsuits which the schools universally lose. However unofficial retribution is harder to prove so not declaring who maintains the website on the masthead is always a good idea.