The modern PC crowd who criticize the end fight are fools....
As of late the PC crowd and the ultra-left wing liberals have shown their criticism of this classic movie. Their biggest complaint is: "so the end says violence solves the problem - how disgusting!"
First off to this group of PC mongers - violence does not solve the problem. Self-defense and standing up for oneself solved it. Mike got knocked out by Ricky after he drew blood on him and Moody got his nose popped by Clifford. In today's world the kids parents would have restraining orders on each other -- they'd have lawyers taking them to court and it would be frowned upon as zero tolerance. This is the highest form of bigotry there is. If one cannot physically defend themselves from an attacker what good is all the legal representation in the world? But back in 1980 Mike probably thought twice before picking a fight with anyone and Moody probably stopped extorting the kids because he was made to look a fool with his nose getting busted. Nobody went home and told their parents. The bullies were neutralized and they all lived happily ever after. Yes. It was like that back then. People messed with you -- you put them in their place and that was that. People survived. And they learned. Nobody got sued or dragged through legal obfuscation.
The bullies in the film (Moody, his gang and Mike) are typical bullies with no spine. They are absolutely foul, rotten and hateful. They are cowards as most true bullies are and resort to the absolute lowest common denominator form of abuse to their victims (feeding Clifford toilet bowl water).
The parents and teachers are impotent as most were back in the day. They can't solve the conflict of the children and when Clifford's dad intervenes and puts the useless principle to use it only makes matters worse for Clifford.
So in the end these two kids did what needed to be done. For their own physical safety and for others; for their own sense of dignity and for their own psychological needs in the story according their character arcs.
I have taught martial arts and self defense for the past 30 years and I was a victim of bully abuse in the Chicago school system in the early to mid-eighties. After I became a black belt and my self-confidence improved no bully ever tried to humiliate or physically pick a fight with me again. But in the interim -- a good solid smack deters the bullies. Try it. It works.