I am assuming that the story was as originally stated and not that this kid was a habitual flirt who had been warned.
It seems to me that several lessons were learned from this event- probably not intentionally. The first one is that to be really frum you have follow the rules to the point of being merciless. Some kids will learn that. OTOH, some kids have now learned that the idea of Modeh v’Ozeiv Yerucham (confess, stop sinning, and get mercy) does not work. i.e. no Teshuva. Furthermore, many will now think that the best way to deal with authority is to deny/lie. Had he not admitted, he might have not been punished. Clearly, being truthful did not help. Lastly, one might see that being a gossiper (like the neighbor in this story) gives one power and is sanctioned by the frum establishment.
What says you? I’m curious to hear if aries has heard any thoughts like these from her clients.