I think the cops acted correctly, they could have gone physical with him but decided to neutralize the threat and keep their jobs at the same time: as pointed out by other commenters grabbing him or something like that could have been seen as "extreme use of force" or something like that, which would have been bullshit in this case, the kid would have been alright... unless the cops were trained by Judge Dredd. Maybe there were other kids near him, that would have been enough reason for me to spray him on-sight.
The kid looks like he needs LIMITS, nothing more. I'm not talking about being agressive towards him or anything like that, his parents should have set things straight right from the beginning, told him who has the authority (those should be his parents, obviously) and encourage him to obey and treat the others as equals or superiors, depending on the case. I mean he is a kid, he shouldn't believe he has power over anyone else, or need it, I blame his family's situation and overall stupidity from his surroundings.
Also, WTF happened to his teachers?! They locked themselves in a room? The level of retardation shown by his elders is more worrying than any of his actions. Come on! He is EIGHT! How can one person be such a coward to loose control over a second grader and let the kid outpower him/her? Nobody loses a job for telling a kid to STFU (in a nice(r) way

) or dragging him to the principal's office: by an arm, hair, ear, leg, whatever, I've seen them all, stupid parents rarely fight back and never win.
I hope he learned something in school that day.