I tend to agree with you. However, a private school has the right to set policy and the mom knew what those policies were--or should have known. It's up to her to conform to them. It sounds like she has an idea that her child needed extra stability. Hopefully, she'll reconsider her lifestyle.
I have a teen-ager in Christian school and she has become a best friend to another girl who has a mother who could very well be this one. Although this girl is staying with an aunt and uncle who realized she had a problem and put her into Christian school, as a parent I do not particularly like the fact that I have to deal with the issues from this friendship that arise. I'm paying a LOT of tuition to keep her out of public school! However, there's not anything I can do. I can understand the school's concern here as well.