I think there is a very serious issue, and agree it's not only best, but also their right to say we can't watch your son anymore because of repeated injuries to other children, misbehavior/ behavior that is putting other children at risk, and stress to their family.
I don't believe anyone is overreacting, and if this were a preschool or k12 situ. the same thing would be true. The parents and child would be worked with for a certain period of time, and after that would be asked to either leave, or to take a couple of weeks to work on those behaviors and come back on a probationary basis in preschool... or the child would be suspended in a k12 situ. (Although, for any offense that actually caused another child to bleed... like the spatula incident... that could equal automatic expulsion for any/all of the children involved since it's using a weapon/ encouraging the use of a weapon... be it a rock/spatula/spork/what-have-you).
While I get that you're not condoning his behavior... minimizing it, by saying that the other parent's children are too sheltered... doesn't help the situation, because it's placing the blame on the other kids. Either intimating that your son wouldn't be being violent if the other kids were _________, or that this kind of violence is what kids should expect from other kids.
It's hard and embarrassing when it's your child who is in the wrong, and it feels to me that you're on the fence. You know hitting and these kinds of behaviors are wrong and you totally don't condone it, but you are also rationalizing it by blame shifting onto the kind of kids and pets they have. Blame the victim. Which is a knee jerk response from MOST people, and is a proven scientific fact. (AKA: THEY fell down because they're clumsy, *I* fell down because I stepped on a patch of ice.) It's a protective measure that most of us have and use on a fairly regular basis.
Is a certain amount "boys will be boys"? I'm sure. But another amount has crossed over their comfort line. Which, as uncomfortable and embarrassing as it is, has to be respected. If it's a big deal to them, it's a big deal.
While the situation MAY be salvageable, it also has the potential to go down hard in flames. It would probably be for the best to find new daycare.