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I urge the LW to check the state law where she lives. In my state, non-clergy people involved in ministry are required to report all instances of child abuse, homicide (planned or committed), suicide (planned, obviously), or elder abuse. She and her church could be held liable if one of the kids files a complaint.
(Clergy people have to report, too, just not if they're hearing a sacramental confession).
Whether it's a legal issue or not, though, this needs to be shut down NOW. I recommend either talking to the other teachers or minister/priest, or both. These kids should not have to deal with her issues, whatever they are, and if it is some kind of pedophilia (as opposed to narcissism), her behavior could escalate.
Being nice and collaborative is great, but, as an educator, your first priority is to protect the kids.