You're assuming that the only thing that will happen is expulsion. Fighting back -- especially if you do what GGP did and land "on the order of 40 blows to the kid's face" -- is very likely to result in the police being called and you being hit with criminal charges, and past the age of 14 or so will get you tried as an adult. On top of that, well, 40 blows to someone's face is going to do some real damage resulting in medical bills, and that kid's parents are going to sue your parents for the damages.

So imagine you're a parent. Your son fights back and beats an alleged bully into the hospital in front of witnesses, including teachers. Your son is expelled, the police took him into custody and charged him with felony assault, and the alleged bully's parents have filed a lawsuit against you and your spouse personally for thousands of dollars in medical expenses plus punitive damages for pain and suffering.

So now you're going to have to shell out money to bail your son out, you're going to have to hire a criminal defense attorney to try and keep your son out of state penitentiary, and you're going to have to hire a civil defense attorney to defend against the alleged bully's lawsuit. Oh, and the economy isn't going so great either. Remember that you can only get a court-appointed criminal attorney if you're absolutely indigent, and there's no such thing as a court-appointed civil attorney because the constitutional right to an attorney only applies to criminal cases.

Unless you are filthy rich, you are not going to be able to afford to sue the school. Even if you were rich enough to sue the school while defending yourself on multiple fronts, you don't have much of a case. There will be multiple witnesses, including teachers, to the fact that your son beat the shit out of another student, but no witnesses to the other kid bullying your son. Bullies are smarter than you think: most of them know to only bully people when nobody's watching. That's how they get away with it.

The best-case scenario is that your son accepts a plea bargain for misdemeanor assault, serving probation and community service, and you settle with the other kid's lawyers for somewhat less than they're asking but still enough to cover the other kid's hospital bills. You sell the house to pay for the lawyers and the settlement, you move into a tiny apartment in a dangerous neighborhood, and maybe if your son is really lucky, you'll have just enough money left over that he can get his GED. College won't happen, and he'll be lucky to get even a low-level retail job until he finishes his probation and the conviction is expunged.

Yeah, it sucks, but that's how the world works.