Yup, the kids should have gotten a very stern talking to and maybe even some punishment, but most of the time a little adult intervention is all that is needed. Obviously the offended lady hadn't been adequately prepared for the job of keeping order on the bus--if that was what she was there for.
With the way that touchy/feely courts and justice are these days, one is really taking a chance if you take it upon yourself to threaten, or correct bad behavior by the little darlins. It cost me $50 one time to issue a badly needed tongue lashing to some of the neighborhood punks (one in particular) who were into calling any lady who happened to pass by where they were, whores. In the end, it was a good investment, because the main punk straightened up after that somewhat. He later had an epiphany when one of my neighbors threatened to blow his head off if he ever caught him messing around with his wife.