This is awful, a really good example of a suits being used way to easily and often. Society needs non-wussies.. What if some calamity happens..
I doubt children can break each others bones by throwing balls at each other. More like that they fall and break bones that way. (but you can fall in neigh-every game...) Of course they should use soft balls..

Maybe dodgeball can be replaced with other things that teach the same things. I think those would be banned too, because of the nature of the lesson. If they are "left behind" in the game, it is good to encounter it in a game, rather then in real life..