Why do you consider a painting of someone which is not mocking them to be mocking them?
However, I think they should have left the class and contacted her regarding this subject and firing her probably was an overkill and done to make the problem go away, though not sure why the student complained to the administration before contacting her despite her giving warnings to the students.
Not it isn't. Teaching art is totally legal in Minnesota.
The reason for "bringing it" to an art history class is that it is historical art.