If I didn't like a kid calling me names back when I was in 4th grade, we'd fight and move on with it. Normally, that didn't happen over words, but it did sometimes. The physical fight would end it.
When it's from a boy to a girl, that's a lot tougher to navigate. What would surely escalate it would be if your daughter targeted him with a racist word. If that happened, your daughter would probably be suspended. It's so messed up.
Anyway, the teacher is in a rough spot.
I hope your daughter pulls through it. That's rough.