According to the report, he did it in the way of a parody, there's nothing wrong with that, it's not like he was parading around pretending to commit the atrocities that Hitler himself had done.
When other people do a parody of Hitler on TV or in movies, we laugh, right? This shouldn't be treated any differently, the school was right to remove him from class and ask him to take it off or change if he was causing a disruption though, that's usually standard policy for anything worn that becomes disruptive/overly distracting.
On a side note, that was brilliant to disguise that costume as a Charlie Chaplin costume, simply brilliant.
