WOW! Very wrong.
It starts at the top, why would the Director of Education, Superintendents, Principals allow this and allow this without parental knowledge or involvement.
What this school and board has done has opened students to bullying if not addressed properly. Sorry to say this but there is no fool-proof way to stop bullying regardless of how hard we all try. Someone will always be there to use information or lies against someone else.
The concept is good, the questions and administration of the questions are horribly presented.
I don't know if teachers are truly to blame on this one though because they're the front line workers and would be following orders from the administration. Yes, a teacher could have refused involvement but at what cost. In the clip it was stated if a student refused participation he/she would receive an in-school suspension (whatever that would consist of).
I'd be getting the parents together with a lawyer, not to sue but to ensure this doesn't happen again, without parental involvement.
I can't speak to the USA but in Canada, a teacher has a duty to report potential harmful situations to the authorities whether that is CAS (children's protection), Police or both, and this exercise/game could potentially be a powder keg.
Just so we are clear regarding duty to report, a teacher has the duty to report child protection issues to their administration and the proper authorities (police or protection). Failure to do so could result in criminal charges in Canada. It's a slippery slope for sure. How I know this is because I worked in a industry where I had to it as a front line CO and subsequently in management. In Ontario, it goes deeper because of the Child Family Services Act and there is a long list of those who are involved with children that have a duty to report.