You say your kids go to school together. Does that concern you? Should you be exposing your kids to this sort of behavior?
I wouldn’t get into too much of an uproar about this* (WRT taking kids out of school). As long as her kids don’t eat by that parents’ house, I wouldn’t be too worried about “corrupting influences.” Can you guarantee that every parent in your kids’ classes always follows halacha in every detail? And if she does, can you guarantee her that a new institution will be better?
The Wolf
(*Notwithstanding the fact that these women must obviously be educated on the matter.)