I believe that bullying is something that can't be addressed at school!
IMO the problems we see manifesting themselves stem from the deterioration of the family unit, when you look at the divorce rate and the lack of a stable home for many of the kids in these classrooms it is no wonder we see problems in school, most kids grow up in daycare, many are split between 2 home with 2 different sets of rules and some with no rules because when you only see them 4 days a month that time is precious, kids need boundaries and most of the bullies are kids with low self esteem that are looking for attention in the wrong way.
When we grew up schools were allowed to give swats to kids, misbehavior was not allowed, and if you got in trouble in school, you were in twice as much trouble at home, I think parents need to take back the responsibility of raising their children, it shouldn't be up to the school.
We as a society have totally taken the responsibility off of the individual, we don't discipline our kids at home, we took the right to discipline our kids away from the schools, we put a no child left behind law in place so no one is held accountable and we continue to push them through, we have taken self defense away from our kids, with the no tolerance policy, if you fight back you are the one in trouble. There needs to be punishment for bad behaviour, I'm not sure who the idiot is that came up with ISS, but I can tell you it isn't a deterent, you will never stop bad behaviour where there is no consequence for that behaviour.
As far as the teacher being the bully, that is what your school board is for, if you can't get anything done on the school level, I would sure go to the board. We have learned the hard way when there is a serious conflict between student and teacher the best thing you can do is get that student out of that classroom.