Are you telling me that the teacher cannot say "Right come on children, lets go into the school hall and we'll have story time" or say "Right, it's a nice day, lets go and have a bit of extra play in the school yard." ?
Oh, the teacher could do that . . . and 6 times out of 10 there'd be no problem. The other four times, though, the community would get up in arms, the local media would accuse the teacher of all sorts of things, the school board would probably reprimand the teacher, etc. etc. Sadly, I've seen it happen in similar cases before (and I've heard a lot about the various school district/state required procedures for similar situations). Unfortunately, Americans in general are happy to sue people for the smallest and dumbest things, so companies, schools, and other public institutions tend to err on the side of caution even if it makes things more difficult in the short run.
In this case, I imagine that the principle realized that all non-physical means of quieting the kid had been used. In that situtation, I'd guess that (s)he decided no matter how it was handled after that point someone would be blasted by the media or sued and decided it would be better if that person/group was with the police, not the school. Not knowing the entire situation, that's my best guess, based on similar occurances.
I wonder if the teacher was legally able to smack that brat after the kid had hit her.
Possibly, depends on the state, but chances are the parent(s) would start up a long term lawsuit against the teacher which, whether the court decided to even hear the case or not, would probably ruin the teacher's career for a good long time.
The only "schools" that allow the use of physical contact/force with students, generally, are children's homes (orphanages) and some particularly unruly (generally inner city) schools. In the latter case, though, there are usually police walking the halls. Heck, my midwestern, suburban, public high school had a full time police officer walking the halls during class times starting in 1998, give or take a year (it started after I graduated but before my little brother got there).
Just as a sign of American legal paranoia:
A couple years ago I bought a candy bar from a vending machine. Simple, nothing out of the ordinary. Turning the bar over, I found instructions for opening the wrapper (and I think, duh!) as well as a warning not to eat the wrapper. A little wondering research later, I discovered that the company put the warning on the wrapper because some idiot tried eating both bar and wrapper and sued the company (sadly, I can't recall which company or candy bar anymore . . . age is taking its toll).