She is not pursuing a lawsuit against the university itself (at least at this point) for exactly the reason you point out here - a university cannot reasonably trust someone with those views to treat Muslim students fairly.
Do you have insider information about the case, or is this your synthesis? The former strikes me as being unlikely, because you seem to have missed that the cornerstone of the suit is the claim that she's not actually the one responsible for the anti-Muslim comment, which is what makes this defamation.