My last ditch effort, and then I'll shut up, I promise.
Speaking as a former teacher, I advise you to not give this letter to your son's teacher. Particularly at a class party. If she reads it right there, it will raise tensions sky-high, both on your part and her part. Add that to the stress already existent at classroom parties (have you ever tried to keep 20+ excitable children calm enough to keep them safe? When there's SUGAR to be had?) and you have a recipe for both of you saying something that you might regret later.
Speaking as a former teacher, I beg you to let this teacher know, in as emotionally controlled manner as possible, that linking a rightly won lottery prize to punishment for talking is illogical, particularly for the reasons mentioned (i.e. that Dakota's talking marks him, somehow, as unable to control himself around animals). I would put it something like this:
"Hi there, Mrs. X (or Ms. X, I don't know). The party was great. I know Dakota and the other children really enjoyed it. I just wanted to let you know that I did receive the letter you sent home the other day, and I discussed it with Dakota, who was very upset and confused by his talking somehow indicating that he wouldn't be able to care for the worms. He has several pets at home, and they're all thriving, despite (or maybe because of) his talking. I'm sure this time of year, all the students are excitable, and maybe in the future, taking away a lottery prize because of exuberance might not be the best course to take."
But I would definately 1. say it in person, not in writing (not at first) 2. wait until the party was over for your son's sake and 3. use as controlled and detached body language and voice tone as possible. It is much easier to write off a hysterical parent than one who is articulate and in control of herself.
Afterward, I would write two letters to the principal. One detailing the mealworm incident. And a separate one briefly notifiying your son's unenrollment.
Anyway, I'm not trying to discount your anger. I'm just offering advice that is most likely to effect any change. Again, trust me, an angry letter sent just to me from a parent wasn't going anywhere but the garbage can. A calm conversation however, and a controlled letter copied and sent to my principal, however! Whew!