The thing is, she's kind of confrontation averse, and in this sort of situation where such a confrontation could seriously change the culture at work, I can't say I blame her.
I know what you're saying, but I think in our minds we play out scenarios that are far worse than what would actually happen if we'd just knuckle down and do it. Presumably this woman is not completely unreasonable and has a reason for wanting to be a preschool teacher--a reason that I assume revolves around liking kids and wanting to help them. I think that if your wife uses a sufficient amount of grace and tact, she could address the issue in a way that doesn't provoke a confrontation. Honestly, speaking from my own experience I'm much angrier if someone goes above my head without even talking to me first than if someone just comes to me and says "hey, this might be a problem".
Personally, I have had success in the past presenting it in a light of "I think I might know something that can help you" rather than "I think you're doing it badly". For instance, if she were to say "Hey, I noticed that you sometimes have some difficulty getting child X to sit down and join the group. In my experience with him, you need to do Y instead", where Y is "lure him with treats" or "ignore him until his natural attention-seeking desire causes him to join the group of his own accord" or "ask him using this specific phrase his mother has taught him to obey".
Then again, my experience is mostly with male engineers, so I'm sure your wife can think of a much better approach than I can. I just want to convey that while I certainly think she shouldn't stand by and let the situation go on without comment, immediately escalating it to the woman's superiors is a pretty backhanded move. After all, how would she like it if a co-worker thought she might be doing something wrong and told her boss without any notice whatsoever?