Glad you've had some communication with the teacher!
She was already aware of it and had told the kid who started it to stop. That was probably when it escalated -- the kids knew they were onto something.
Can you find this out for sure? I worry a bit about basing a plan of action on it if you're not certain. In my experience, at this age there is a pretty constant stream of direction coming at kids from authority figures and it doesn't really mean that much (in terms of "onto something") if they're reprimanded. They may well respond (as in, stop doing it because the teacher tells them to stop -- second-graders seem to still respond pretty well to this stuff) but I think that an escalation was probably more likely to be based on Mo's
reaction, not the teacher's.
If it was the teacher's reaction that escalated things, then the thing to do would be to get her out of it while you coach Mo on how to handle it himself.
If it was Mo's reaction that escalated things, then getting the teacher out of the picture and putting Mo (and his reactions) at the center of handling things may just make it worse.