The teacher's faith couldn't possibly be relevant to a child's gender identity as the Bible has no such pronouncements. She was motivated by anti-LBGTQ hate. Now if she had objected on the basis of biological science, insisting on pronouns appropriate to the child's actual genetics, she'd be on much stronger ground.

Children will always search out an angle to express insubordination. Allowing children to dictate social norms of behavior is ridiculous. If they don't like their correct and accurate pronoun, they can take their book and study it in detention. Claims of sexual dysphoria can be respected without them being encouraged or facilitated.