It’s all a big slippery slope.
If the school lets this Valedictorian get away with making a speech with the H.E. Double Hockey Sticks word, the next Valedictorian may say “Heck,” “Darn” or even “Dang” in her valedictorian speech.
The "students" at the ceremony have already completed the requirements for their Diploma. Therefore, those diplomas are the student's property. The ceremony is simply a way of passing the physical possession of property over to the owner. Upon completion of the last class hour, the last legally required day of attendance - with the minimum passing grade - the student, not the Administrators, own that document.
As far as the speech goes - do we, or do we not have the right of Freedom of Speech? After the last class, these are now citizens, not students. They may say any word they chose in their speech, including profanity. At the same token, the school reserves the right to remove said profane speaker from the stand, because the school is in charge of the venue. Say what you will - but no one has the right to demand that you can continue with the speech.
However, "stealing" your earned documentation is something that should be considered Felony theft - and IMHO, prosecuted. I'd have no problem throwning these clowns in jail, and permanently destroying their means of earning an income in the education system. In many states, the monetary value that raises theft to a Felony is $1,000. I'd say that 12 years of one's life becoming educated is worth far more than $1,000.