You know, if it really upset me and it still bothered me after the weekend was over, I'd check in with the teacher before talking to her superiors. This sounds strange and if it were my son, I'd want to double-check the story.
When I first skimmed your post, the phrase "hmm...big bug" stood out to me as possibly being mistaken as "big butt". Reading through the second time, it seemed strange, just because teachers don't usually expect children to touch them (or remove bugs, so why did she have that expectation?).
Certainly, if your conversation with the teacher leads you to think there is something amiss, talk to the principal. It just seems a strange conversation for a teacher to be having in front of a peer teacher and another student. Puzzling... Otherwise, let it go.
Strange things happen in this world on a daily basis, and unless you think this teacher is singling your son out particularly, it's a good opportunity to teach resilience. Or perhaps he could go talk to the teacher himself and ask if there was a misunderstanding? He's at an age that this might be a good experience for him to work out if there was a misunderstanding... or perhaps she would apologize, too. There's only one way to find out.