In third grade, I was a bully. Between trying really hard to fit in (I was always the loser new kid with no friends) and struggling with a screwed up home life and what I think looking back was depression, I kind of fell into it. I was actually a really nice person even then but it got beat out I guess.
At any rate, my teacher ended up bullying me... or at least it really felt like it at the time. It wasn't ongoing but I don't think she handled me appropriately at all. I remember how absolutely horrible I felt. I didn't MEAN to hurt anyone, I just really wanted friends and to fit in. I still remember the strand of spit on her mouth as she was quietly yelling (does that make sense) at me. I don't remember what she was saying anymore but I definitely remember how I felt. I was scared and I just wanted to run away. I've been in lots of trouble before and I didn't feel like that... I only remember that what she was saying to me isn't anywhere near how she should have handled it. Well, I do remember her saying she was bullied as a kid... I guess she was taking that out on me.
I think I'd call the parents of the 'bullies' and make sure they are okay and that the parents know what happened. The kids might not have told them. It doesn't matter what they were doing to the other students, they deserve support against an adult who thinks it is okay to lead a bullying session against them. Bullies can do some downright awful things (I have been on both ends... ) but that doesn't make a teacher sanctioned class hate fest okay ever. especially not with 7 year olds. I can't imagine there are too many 7 year olds who bully just for the fun of it anyway... they need adults who can actually help them. Yes, the other students need to learn how to stick together against a bully... but when a bully gets 'turned in' so to speak, it shouldn't be about rubbing their face in it.