It is very important to discuss this with the teacher while keeping an open mind. If you are not satisfied with the way the teacher disciplines or handles tears then talk with the director.
You didn't say what the teacher's attitude was when she grabbed the child's arm. Some people are more physical than others. If she's calm and not irritated or angry then her attitude is good. I'd suggest to her reasons that you want her to not handle children that way. Again, if you're still concerned talk with the director.
If you do decide to talk with the director for whatever reason, let the teacher know that you're doing that. Be diplomatic at all times.
About going to the restroom to cry. My daughter and I both sent her children at that age to their bedroom and still do when they're whining, being unhappy and unpleasant to be around. We see it as a need to have some time to calm down. It's not punishment or discipline per se. It's one way to give yourself and them some space. We quietly and in a kind voice just tell them to go to their room until they're feeling better.We've talked with them about this process at times when they aren't whining. They can come out of their room when they're able to be pleasant again. This teaches them how to self-soothe. We ask them if they want a hug but if they say no, it's OK.
This said, I'd need more info before I'd venture an opinion. First, I'd want to know if this really does happen. At 3, your child's brain is still not able to differentiate between fact and fantasy. Perhaps they read a story and this is your child's interpretation which may be combined with an actual event or another child's story. My granddaughter has always had a vivid imagination. Since she started talking in conversational ways she's described what has happened at an event during which I was present. Sometimes her story is close to what happened but just as often it's not even close. She's told her mother I was mean to her when what had happened is I wouldn't buy her a toy while we were at the store.
How many toddlers does the teacher have in her room. Are all the children close in age? What is the adult to child ratio? Is there somewhere else more appropriate for a child to spend time away from the noise and activities in the classroom? Is there a child in the classroom with a vivid imagination or who has a need to tell stories to get attention.
Your daughter has only been there 2 weeks. You say that she is happy and likes the preschool but doesn't like the teacher. Nearly all children like and then dislike their teacher back and forth depending on what happened that day, how they themselves are feeling or what they think their parents want to hear.
Your husband is upset. Your daughter knows that. Unless your conversation with the teacher does not go well I definitely recommend that you not immediately change schools. Your daughter needs consistency. Changing schools, if the school has the possibility of being a reasonable place to be, has the potential for damage to your daughter's trust and sense of security. She likes the school. She won't understand why she has to change. And you don't want to tell her any specific reasons why either. She's 3 and too young for that responsibility.
I urge you to first work with the teacher. If you have doubts, spend more time at the school observing. Try being at the school when other parents are picking up children and talk with them. Or, ask the school for the names and phone numbers of other parents and give them a call.
Unless you see something totally out of line and the teacher is defensive and won't discuss your concerns with you, you really don't know what the school is like. If you change schools, you're starting over, which is stressful for you and your daughter. And you won't know what that school is really like until you spend more time there.
Asking your 3 yo if the teacher was nice today is not helpful. What does a 3 yo consider nice? My granddaughter has been in an after school Y program since kindergarten. A teacher is nice if (s)he lets her do whatever she wants to do. A teacher can discipline and still be nice but there are personality issues involved that help determine if the teacher is nice in spite of having put her in time out.
You will never find a preschool or school with whom you'll agree 100% of the time. I also favor attachment parenting. I've learned over the years that a parent and a teacher have to use different ways of doing some things. When you put your daughter in time out, you are only dealing with your daughter. A teacher has, by law no more than 6 toddlers if she's by herself. She has to consider the needs of all 6 children when she puts one child in time out. Some children have to be led to time out. Others don't. This is just one example.
Do discuss your expectations with the teacher. But please don't expect that she's going to do everything the same way that you do them. You should have your daughter in a school that has the same values that you have and uses discipline techniques that correspond to your values.
My daughter was in a Montessori program one summer between the first and second grades. My sense is that although the description of a Montessori program emphasized the needs of individual children and encouraged exploratory play and learning, which I did find to be true, they were also more structured than I expected. It's been 20 some years and so I can't be more specific.
If you haven't discussed the school's program already, it will help for you to do that now. Think thru what aspects of the program are important to you and what ones you can compromise on. Spend some time getting to know the school's routine, the teacher, and aides, as well as at least a cursory understanding of the personalities of the other children and how they fit with your child's personality.