What is happening with our kids?

A story ran today about a class of third grade students in Georgia that banded together to either hurt or kill their teacher. The kids actually brought weapons, duct tape, etc. to school.
I have an eight year old son and a 10 year old daughter. It is beyond my comprehension that a) my children don't know the clear line drawn between reality and fantasy and b) they could find it in their hearts to think about doing something that awful to another person, especially a teacher who had dedicated her life to children. (And let's not forget c) they would fear the punishment awaiting them when they got home with this kind of news! Whew! Ha!)
There is no reset button in real life. Super Smash Bros lets you go to a different battle if you lose. Lego Star Wars characters are easily re-built when they take a hit. Life isn't like that and kids need to know the difference. But are these types of games teaching our kids that violence is the answer? When we were kids, our video games never killed people. Aliens, centipedes, minotaurs, but never people.
Even cartoons, which are now on 24/7 need to be screened for content by parents. Do I think that I was psychologially affected every time Bugs Bunny dropped an anvil on an unsuspecting Daffy Duck? Of course not. I laughed and I got over it. But cartoon characters Billy and Mandy hang out with the Grim Reaper. Death is their friend. What message does that send to our kids?