I agree that the kid's not dropping such a minor issue and writing 'stories' relating to it, over and over and over is certainly cause for concern. I definitely think she had reason to be afraid, especially with the story about killing the teacher. I don't think, however, that the psychiatric facility was called for. Removal from school and a psychological or psychiatric evaluation for sure. I don't think he met the criteria for hospitalization, though I'm basing this on what I've read. There may be more to the story.
I believe conferencing with the student's parents would've been my first step; if that proved unproductive in resolving the issue, I would think psychiatric evaluation might be warranted, followed by a stint in ISS, or a temporary suspension from school, or whatever disciplinary measures the school's administrators deemed appropriate.
Hospitalizing teenagers for what amounted to disciplinary problems or delinquent behavior was a big trend, at least among families of my socioeconomic class, back when I was a teen in the 80s.
I hardly knew anyone who hadn't done a stint in one of our city's four youth psychiatric/rehab facilities, often for "attitude" offenses such as talking back to and/or fighting with their parents, or for such things as poor grades, staying out past curfew, "promiscuity", marijuana, dressing in ways parents perceived as inappropriate, etc. I don't know that these stints, which generally amounted to 30 days, really did anything to resolve the disciplinary issues the teen in question was having, although I guess it did serve as a "cool down" period for the whole family, allowing them to get some perspective and regroup.
On the other hand, some of my peers who really
could've used some psychiatric help- some with eating and "cutting" disorders, others who exhibited symptoms of manic depression- more often than not didn't get the help they needed.
Because they were quiet and kept their grades up, their parents were slow to realize anything was amiss.
It was just the usual case of the squeaky wheel getting the grease, I guess.