Hi Karen,You are so very tactful. I think your plan is wonderful. But I would do one more thing.
Teachers should know better not to ridicule anyone. They are examples to our children. I think you should report the teacher to the principal. It is not to be mean, but to have the teacher learn a lesson.
It appears you have raised your children well and with good self esteem. If she had said that to a child who was more sensitive and fragile, she could have caused a lot of damage. It is time she learn about dystonia and also how to set an example to children on dealing with differences.