If the principal knew about it, then the school is in trouble - and rightfully so.
I don’t know. I think that substitutes should be watched pretty closely. They are unfamiliar with the class and with the routine. If this teacher was able to show a 2-3 hour video to her class, she probably wasn’t being adequately supervised. As a permanent teacher, I would be questioned if my class was watching a video for that length of time.
Of course, she might have been a long term sub, which is different. Hopefully, there is no way this woman will ever be allowed inside a school again.