This type of frustrated employees are commonly prevalent everywhere. They may be suffering from some personal problem whereas due to their inability to overcome their weakness that side, they take the opportunity to fight or curse the weak people they come across in their routine life. This is one such example.
Well the legal recourse for this that :
You may advise your wife to send a complaint directly to the controlling education officer with copy endorsed to the District Education Officer concerned. narrating the the worst attitude and behavior of the headmistress and also the threats she poses to 2 years old innocent child, this will draw the attention of the authority to conduct a probe into the obnoxious behavior of the HM/government servant and warn her of the consequence if she is found guilty;
Alternately you can lodge a complaint with the nearest police station against her violent acts and behavior under the provisions for punishment for criminal intimidation (section 506 IPC).
You may also issue a legal notice to the headmistress condemning her unruly behavior with her neighbor and to restrain herself from indulging in such activities in future lest she will be drawn to court of law for proper relief against her and she would be liable for the consequences.