Granted, in this case I agree that it's better judgment not to forward the picture for all the reasons you've mentioned - but calling it insane is a bit much.
If you're a teacher, it would be wise to assume the parents may be in some way part of the problem.
If you're a teacher coming up with excuses to share nudes of your students with other people, you are at risk of being investigated very seriously as a potential child molester or distributor of child porn.
This is a minefield for a teacher and I don't think it's really a stretch to say it's "insane" or "extremely stupid" or other similarly strong language.
It has bad idea written all over it in blinking neon letters.
(And that's part of the reason why some of the ways in which parts of society react to these things is so problematic. If you're reacting that strongly to something that most likely is just the result of naivety, then frankly you have a much stronger claim to being insane than the person who's being naive.)
But your intuition is pretty much spot-on with the training I have received.
Sending a nude photo of a child to the child’s parents is absolutely beyond any form of rationality. Discuss the concern with the parents, inform the police, get them to verify that their little angel did in fact take nudes and send them around.
It’s literally forwarding CP. Let the authorities deal with this, if the parent wants to see their kids nudes then… well, I don’t really know what to say other than let the authorities deal with it. They can show them for verification purposes or something, without sending this image to any more devices than it needs to exist on.