[OMFG!You'reActuallySmart!]

She said she wasn't sure who the bully was and was surprised it was the teacher. Assuming other verbal things were said (probably were since she brought a tape recorder), couldn't one identify the teacher's voice while in that teacher's class? That part is a bit odd.

As for what the teacher said, it probably started off as a laughing matter but the content isn't appropriate for a teacher to be saying. It's something you'd say to a friend if you and the friend joust back and forth like that, knowing it's a joke and taking it in good humour. But it's not appropriate and even if others knew it was a joke, this student didn't feel it was.