Umm... that''s ridiculous what the teacher said about having to provide for the whole class. She should be able to set your son's aside and give it to him specifically. What if your son needed to use an inhaler, would she only let him use it if one was provided for everybody? Is she incapable of keeping the children's backpacks and coats and artwork seperate? Seriously, I would throw a fit with her superior over buying for the whole class. What if you don't comply, will she not let him play with the playdoh while other children are?
We have a girl in our church who has celiac disease and for the sacrament, she takes her special little piece of bread in a ziplock bag, gives it to the boys, and when they pass the bread around, that is the piece she gets.
Besides, I've read it's hard to store and doesn't last for a long time. So are you going to have to resupply the entire classes model magic every time it dries out? Anyways, I've read that some colors stains and some don't but it really depends on the fabric.
http://www.epinions.com/reviews/Model_Magic