First off--hi former neighbors

We used to live in Livonia. Still missing the rec. center (which was only a year old when we moved away).
Two issues here. First is what control do/should schools have at the bus stop? This is sort of a gray area for me. I feel like most of the time teh shcool should NOT be involved in what happens at the bus stop--unless they want to go so far as to also provide supervision at the stop. However, (there is always a however isn't there) I do think sometimes they might need to step in. For example, if there were a child who was bullying all the otehr children on a reuglar basis at the stop something would have to be done so the other kids could safely get to school. Short of serious, on going issues (which might result in teh need to provide bus stop supervision for a while--I think having someone official on sight at the stop is the only legitimate way for the school to then step in and punish kdis for things that happen there) then no, schools should not get to police what happens.
Second issue--this actual incident. Assuming that we are getting the ENTIRE story, then I think everyone has over reacted in a huge way. To a 7 year old the comment about the mother's clothing was equally as mean as the comment made to her about her mother. But, it would not likely have any other significance to her. I doubt the little girl meant to make fun of the other child's religion or really understood that she was. She was simply retaliating to one mean comment with another mean comment. Tit for tat. Honestly I don't think any adults should have gotten invloved at all--let the kids work this out if it was a one time tit for tat thing like it sounds. But, IF adults are going to be involved, it should be so explain to both kids that insulting each other and their moms is not nice and to explain to the little girl why her classmate's mom dresses the way she does (but not be angry at her for not seeing that her comment might have deeper meanings to an adult than to a 7 year old). IF some sort of punishment were to be doeld out it should be to both kids for making mean comments.