Grandsons and grade school

Here I am because I still cannot sleep.  I want to scream.  In a small community like ours the rules are apparently different depending on who you know.  We've seen it in the past in hiring practices at the schools and government jobs but this is the first encounter with it in the schoolyard.  Evidently it is ok on some level to decide punishment for kids who bully based on who there families are and how long you have known them.  "They are good folks." and "Boys will be boys." determines when the rules set by school officials are carried out. 
I know my grandson should not have pushed the bully first but he had been goaded for months and called "wimp", etc. whenever this kid felt like humiliating him in front of the other kids.  I asked him what he thought would happpen and he said, "I hoped he would back off."  Instead he shoved he to the ground.  The principal it sticking to the theory that he didn't mean to hurt him, he just didn't know his own strength.
These kids are 8-9 year-old bracket.  The bully is the size of a man.  My grandson is out of shape, normal size kid that eats too much and isn't active.  He has been laughed at and called names by this boy on a regular basis but didn't want to report it because then "tattle-tale" is added to the scorn.  He tried to befriend the kid and sometimes it worked.  If the kid wasn't in the mood for friendship he tormented my grandson.  I don't get it.  What do we say.  When I was in school, you struck back hard and fast.  They would leave you alone if they thought that they would get hurt too.  Zero tolerance is a better theory but it isn't workable unless it is applied to everyone. 
 Nothing will come of this except misery for my grandchild and somewhere, down the line, kids will figure out that you can still be your little mean selves if your parents know the right people.