Perhaps the teacher didn't bring it up. You can't control what kids are taught in their own homes - one of the kids could have said "jews hate muslims" and the teacher may have responded even with something like "in some parts of the world it is sad that there have been fights because of jews hating muslims or muslims hating jews but that is not the way it should be - we are all equal" KWIM.

Just saying it might not have MEANT to be racist - my parents were always very open with me from a very young age about what racism is (including what was happening in Rwanda at the time) and how I might come across discrimination against certain races (yes they gave specifics) and how it was not on and God was impartial. It was just as well as from Kindy there were derogatory terms etc used by certain classmates against those of certain backgrounds - racism is one of those things which is usually picked up on from parents so kids will reflect it from a VERY young age if they've been exposed. Guess it's a bit off point because that's home education which obviously you teach your kids yourself and don't want teachers doing for you - but just saying, perhaps the teacher had good intentions?