kell, firstly so sorry you are having such a challenging time with your 12 year old. i really disagree with the woman coming to your door and confronting you. this is usually against school policy she should have gone to the school with her son and gone through it this way. she is lucky you were so responsive and apologetic alot of parents aren't.
look, honestly kids do stoopid stuff because they are kids, their brains aren't developed fully yet hence the protection and guidance of their parents is necessary. i'm not excusing your son's behaviour by any means but this action does not mean he is destined to a life in jail!!! he made a or some mistakes, was taken by power (as even adults can be) and has run with it cos it must have felt right for him at the time. it doesn't mean he is a bully. he bullied a child but we can't label him for the rest of his life because of this action. clearly you are a loving and respectful parent and he will understand the consequences of his actions (as you have clearly said this is NOT ok). i am sure there are websites for kids on bullying and being bullied. perhaps try some role play so he really can understand the feelings of this other boy. you say that he is walking around nicely with the boy, this is great and shows the true boy inside - not the 'mean' child. you have done a great job. well done. encourage this behaviour (as i'm sure you are), discuss how he is feeling about being nice and maybe even a 'mentor' to the little guy, you must be so proud of him.
beckles