I think it comes down to this:
Let's take Jesus vs. Santa out of the mix for a second. As a parent, I am the ultimate moral authority when it comes to my young child. When I have chosen a course of action as it relates to raising my child, it is extremely harmful for another (albeit lesser) authority figure to directly and knowingly contradict or undermine my approach.
In my opinion, this is the height of educational arrogance, whether it be from the Left, or in this instance, from the Right. This substitute teacher, regardless of the topic or her particular view, took upon herself the mantle of moral authority, overruled without the benefit of any discussion the parents' wishes, and destroyed the approach that those parents were going to be taking with their kids. Not only did she destroy the approach, but she cast doubt on the parents' role of moral authority and the trust that the kids have in them.
As for her being in a bind, I'm not really buying that. As others have laid out, she had a couple of options-- as distastful as she felt they were. This wasn't about "making a stand". This was about self-righteous, holier-than-thou, falsely-pious arrogance, and sticking it in the eye of both the secular school system and those heathen parents.
I agree with you completely. And next time she opens her Bible, Ms. Conservatrix/Farissi should check out Proverbs 26:17: "He that passeth by, and meddleth with strife belonging not to him, is like one that taketh a dog by the ears."