Even if she wasn't a mafia princess in addition to being a school teacher, school teachers actually can and do sometimes dress sexy. No slew of men is going to get handsy with her at this particular party, and she's supposed to be a distraction. Don't know if you've watched it, but I'm thinking of the Sopranos, and what one of the female characters on that show might wear to a similar party.
I also don't think it's helpful to label people as slutty, period. And particularly unhelpful to label women as slutty based on what they are wearing.
I don't agree with your fashion tips, but even if I did, sounds like you'd approve of her dress if only her back was fully covered. (If you're going for plunging neckline, cover your back and wear a long skirt with a single thigh-high slit.) It's a style choice, no a moral choice, which goes to the 'slutty' comment as well.