@concernedteacher,
Uh..., I don't know about abuse here. Kids are pretty tough, or should be. Maybe you could also wonder why they seem so overly sensitive. What are they doing the rest of day when not being "abused?" Are they happily playing, or learning together?
When I did volunteer work with young children the head of this particular program suggested hugging is OK but somehow not necessary. What if the child told his parents about the "hugging."
Oh, dear, I too think you could have stayed on this job, maybe changed your own vision of what you see. It seems you didn't give this job a chance. Hopefully, youre still there and asking our opinion to assist you in your decision to leave, or attempt to change it yourself as someone suggested.