I have thought about this one for a while and it is hard for me to answer this question. One has to take into account that the Amish have a very different culture than the one we are used to, and thus may very likely respond totally different and even "weird" in our eyes to any given situation.
To them it may not be an exaggeration, but a logical response, a standard idea on what should happen with a place of trauma. They have shown by their capability to forgive the person who did it how they move on. Maybe this tearing down of the school and building new one is their way of letting go.
I think therefore that it is not our place to even judge whether or not it is an overreaction, especially not since it doesn't influence the lives of anyone else BUT the Amish. The close-knit community wouldn't likely allow a non-Amish to attend the school. If it did, then I might have responded differently, but I am fairly sure of this.