There is a huge difference between a four year old using offensive language and a one year old (or a child of any age) threatening someone with a knife!
Any child who attacks another, verbally or physically, should be disciplined, but the approach should be proportionate. A small child using the wrong word is unlikely to be doing so with 'evil' intent, but a child coming to school armed is clearly troubled, and there has to be intervention to prevent actual harm.
If a group of children pick on a classmate (particularly if they are isolating them because of perceived difference) then of course it is more serious than suggested in the OP. I am not suggesting that terms like 'retard' are acceptable at all - they aren't. Adults have to make that clear, and a teacher should be able to read the situation, know the intention of the offender(s) and act accordingly, but as a one-off I can't see how it is a police matter. Taking items from others, or cyber bullying is a different matter, as is physical violence.