didn't anyone notice the subtext of this movie

There were several references to lives outside of school. All of the characters were one dimentional charicatures until you learned their whole back story. This illustrates the mispercetions among youth with limited frame of reference. Much of the backstory was not revealed until the very end.

At the end of the movie it was revealed that Mr. Walsh was obviously moved and heavily affected by Stanton's suicide attempt. That motivated all his reactions. He wasn't actually out to get Maddox, he was actually concerned that he would repeat Stanton's mistakes. He actually wasn't as one dimentional as he first appeared.

Maddox was hallucinating and probably suffering paranoid psychosis. As far as the believablility of his influence on the student body, vilifying one subgroup (authority) and idolozing another subgroup (youth) has been a very successful PR tool used in all kinds of media (Hitler, etc.) Looking at people one dimentionally.

For several reasons the media was only able to access one side of the story (one dimentional). That among other things lead to misperceptions about Stanton's institutionalization.

The answers aren't in permisiveness or in authoritarianism. There was an obvious reference to the fact that a belief system should be acknowledged in schools (maybe like how it's done in AA/NA).