This Cleveland Plain Dealer article has a fairly detailed look at the story (the demonstration was the classic methanol flame/various salts experiment) and subsequent settlement. The details are gruesome and the teacher in question was grossly irresponsible, to say the least. (She paid a tragic price, in that her son was part of the permanently injured group.)
Like Jyllian, it seems to me that there are a lot of alcohol fires reported in school settings (as crudely measured by Jyllian's chemical safety roundups.) I wish I knew how I could help the situation; by putting this on YouTube, it seems like CSB has put their best foot forward.
There's a lot of great things that can come out of high school chemistry demonstrations. My high school chemistry teachers would put on the classic flame/explosion show (magnesium/dry ice, hydrogen balloons, they did a thermite reaction one year) and it was freakin' awesome. I loved it. They managed to do things the right way; they were fairly serious about safety (PPE for them, keeping us a fair distance away). In the case in the video, there wasn't an adequate enough amount of administrative supervision. There never is, I suppose.
How to prevent a Western Reserve-type accident (or another bugaboo, the exploding nitric acid waste bottle) from happening? I don't know, but I'd sure like to try.