Some folks have alleged this may be a hoax?  If this is a real story, it was only a minor 2 hour detention rather a major suspension for the student, for not following school policy. The student had repeated warnings to close down the application, even though the teacher may or may not know that Firefox is another browser alternative for the student to complete their work under.

The student may not have known how to save their work that was in process as a compounding factor.  Still, this incident provides an interesting point regarding IT security and software policies.  Folks must abide by the policies, rules, and disciplinary warnings related to software policies.

Personally, I like IE 7, Firefox, Opera, and Safari as browser tools.   The latest versions of each browser has good security and functionality.  Each of these tools have their advantages and disavantages.  For example, as most exploits in the wild are written for IE, it might be beneficial for schools or libraries to have Firefox as a complementary browser to reduce leading edge spyware or adware infections (albeit no browser is entirely immune or safe).  Still, if an organization does not want to support additional software, users should abide by the rules.  

Student Gets Detention for Using FireFox
http://gizmodo.com/gadgets/ha/high-schooler-gets-detention-for-using-firefox-334477.php
http://www.neowin.net/forum/index.php?showtopic=607330
http://www.siliconnews.net/index2.php?option=com_content&do_pdf=1&id=384369

Below is a more pronounced example of the dangers associated with allowing folks at school or work to "do their own thing"

One Example related to dangers of allowing unrestricted software usage
http://www.neowin.net/forum/index.php?&showtopic=607330&st=15

QUOTE: Not browser related but one of my friends booted one of the school computer from his USB which had Linux on it, it let him access all the files on the network of the system, so he could see the name and address of every pupil etc.. This is probably just the bad security at my school, but i can see why schools might take something like this seriously  It was funny though