I am something of a Newhart fan, and I'd call this a decent episode. It's better than some, but not one of the best.
I'll assume the reader is familiar with the premise already. So we have Dick's old teacher from his childhood now teaching an adult education class, and behaving toward these adults like the traditional severe and proper elementary school teacher, and talking to these adults as though they were children. It's not realistic and that's fine. As I think of Newhart, it's not meant to be a realistic comedy. It's an exaggerated and fanciful version of real life.
But what I find difficult to accept in this episode is Dick's behavior. He is still holding a grudge against the teacher, and he reverts to very childlike behavior to exact revenge. It's out of character for Dick. It weakens the very premise that Newhart is built on, i.e. That Dick is the sensible normal person in the middle of all these eccentric characters.
Besides that, Dick's behavior was simply too silly. I couldn't buy it even as purposely exaggerated humor.
There are some bright spots here and there. George's reaction to Dick's situation were quite funny. Also, as someone who has never been an admirer of Tom Cruise as an actor, I particularly liked the subplot of Michael's imitation of Tom Cruise! Michael and Stephanie are just the kind of people who might actually "appreciate" a Tom Cruise film festival of all things. Okay, I probably stepped on some toes with those comments.