The "N" word vs "Fag*ot"?

In my sons 9th grade cl he jokingly called a friend of his a "fa*got". His teacher overheard and told him that using that word (fa*got) was just like using the "N" word. The problem I have is that when she was comparing the two words she was actually saying the "N" word in it's entirity. She went on to repeat the word 3 or 4 more times in cl. Now I dont approve of the word "fa*got" and the detention my son received was well deserved but I think his teacher went way too far using the "N" word. Am I wrong? Although both words are bad I believe the "N" word is on a whole nother' level than "fa*got". I may be wrong but I would love to hear other peoples opinion especially from the community on the word "fa*got". PS This same little boy came home from school when he was 9 and looked up the word "fag" in the dictionary and asked us why someone at school would call him a "bundle of sticks" which is one of the definitions of the word "fag". He had no idea.