What to do when the Teacher is the one being a Bully?

Sorry Guys I know I have been away for awhile with Christmas, the flu and the current situation with my youngest going on I've been a little lost, I have been reading though : D I got like $400 from hubby for my Christmas gift and spent all of it on Ebooks no kidding!

Anyway let me get to why I am asking for help my youngest is 9 and in 3rd grade, this is the one that wants to be a doctor she also has food allergies to the point that if she eats or drinks anything with milk or dairy products in it she'll go into anaphylatic shock (We carry Epi Pens with us) she also has Asthma and wears a Medical alert bracelet I tell you all this so you'll get a sense of this really cool kid because she's incredibly smart too She decided that she wanted to be a Doctor when she was around 5 when her Asthma started to get worse she even asked for a real stethoscope and blood pressure cuff (not a toy one mom, she told me rolling her eyes) for Christmas. So here's my problem it started about a month after school did this kid who couldn't wait to go to school before started crying and begging me in the mornings not to send her it took me a while to get it out of her what was wrong, when I did it was that her teacher was yelling at her and saying stuff like your not smart enough to be a doctor, your boots are ridiculous (her favorite comfort cowboy boots), is there something wrong in your head, that was just all I could get out of her. So of course I went to the Principal who asked me to give her a couple days to get to the bottom of it, I did that. My Hubby and I went back two weeks later (this was in November) the Principal said she couldn't find anything wrong with the teacher but brought up some other suggestions one: to move her away from what is considered a bad influence child (HUH?) Yeah I didn't get that either and two: my child should be seen by a doctor that maybe she needed to be medicated for Anxiety. No that did not go over well with me I don't believe a pill to calm a child is the way to go she's fine everywhere else but at school
Since the holidays were wild and crazy as always I didn't push it but never heard back from the Principal either. Yesterday I got her second report card this child who always made straight A's is now all C's and a D I check her planner everyday and any homework has been done so I know it's not that This Teacher also has my phone number and email if they were concerned about her work, I have heard nothing. My child also reads on a 6th grade level (she's a reader like me) so why are grades dropping my personal opinion is the Teacher is mad that I complained.
I have had other friends who happen to work there tell me that he'll make comments or actually make fun of my  child when it's just teachers around. I'm really struggling with this because 1: I'm a parent of course I wanna come to her rescue 2: it makes me angry that I can't get anyone to listen 3: I thought we were trying to stop bullying not allow adults who should know better confuse and humiliate students

I haven't just assumed my child is perfect either I mean I have to work with this kid on math which she is struggling with, but I feel as though I'm getting nowhere so What do I do? Please help I'm afraid that it's getting worse