Joey doesn't really take Michelle to the principal's office so she's not going to be in any serious trouble anyway - but she's upset just as D.J. was whens he was grounded. She does get sent to her room for a timeout, but probably had a timeout there, too - if the principal did anything. It was 5 minutes after school started, and they woudln't have even had announcements yet. Probably they have an Australian style Principal's Assistant who's a higher grade a girl usually at the highest grade level) that handles disciline, talking to the kids, etc. - it explains letting Joey just letting her wander the halls there, as well as other earlier things (like why Charles is wiling to tell Stephanie when he hadn't told anyone before - it sounds like she was in a position of trust.)
So, other than learnign even more that they likely had a PA that Stephanie started most likely, and seeing Danny named Mildew, it did nothing, as D.J. & Viper weren't even that great, I didn't like him as a boyfriend for her personally.
The more I think about it, I wonder if Michelle even got a timeout - probably she just talked to her. This was just weird. Not bad enough to be a dream sequence, but I think Michelle & Joey more realistically patch things up after lunch & Joey does the egg experiment then. Or even mroe likely right after she comes back from timeout.