Wow, Ellie!
This is so weird! A few children at our school have chocolate allergies, but kids still bring chocolate to our school. The more sensitive families will also bring a non-chocolate choice too. The only thing that came close to this (in the food dept) is an extremely obese teacher not allowing sugar into the classroom. Really fun parties there, boy.
I am appalled to learn that some schools will deny a child LUNCH as punishment!

That is so basic to health. What are they thinking?
I have had many battles with a few teachers and yes, there is retaliation to some degree some times. I think the teaching profession (like a few other professions) can draw people who think that being the only grownup in the room gives them "power-over" the kids. The really hard core ones will do anything to get you out of their classroom. It is their territory and we parents are invaders, threats. It ISN'T PERSONAL. It's THEIR problem.
I agree with all those above who say principals cave when faced with the L word: lawsuit. And amazingly, it sometimes takes that to get them to act because they ARE trying to please everyone, including wacko teachers.
That said, I feel bad for your son, but the "humiliation" of switching classrooms may be a better less painful outcome than dragging out the entire year. What does he really stand to lose? Your family certainly can't be the only one that thinks this teacher is wacky. Everyone may think you are very smart to get out of her class and into another. Your son is not the problem. Don't let her define it that way. I'll bet there are plenty of staff members who are tired of hearing the peanut lecture and eat pb&j in the staff room just to get her goat!
Perhaps you might feel better if you approached another prospective teacher discreetly and without putting him/her in an awkward position, ask "would there be a problem if a family switched their child into your class at this point in the school year?" You can be neutral and diplomatic (the teacher may not be "allowed" to say anything) but if s/he asks why, you can simply say the chemistry just isn't working and perhaps your son would benefit from a change. A change doesn't have to be viewed as a humiliation but can be prudent thing to do.
Good luck! Boy, do I feel your pain.

Tell us how it turns out. Seeker