Kids being kids? Or should I be concerned?

My 3 yr old son was playing with our neighbors almost 5 yr old granddaughter in her bedroom with the door open. He first yelled about her hitting his butt and so I went into the room to see what was going on. She left the room and went in the bathroom and my son said he was rolling around on the floor and she hit his butt. I told him it was probably an accident and left it at that. 10 minutes later I went in the room to see if my son had to use the bathroom and they were in a corner sitting down and he had a play kitchen spatula in his and she was sitting in front of him with her back to him. I brought him back into the room after potty time and he grabbed her hand and pulled her back into the corner where they were. About 5 minutes later I went back in the room and they were both in the corner again with her back to my son and she was pulling up her pants.I asked them what they were doing and she said nothing, we weren't doing anything. I immediately brought my son home and asked him what they were doing. My son has Apraxia which a speech/motor skill disorder, but through his own language and showing me he says that she told him to pull her pants down and put the play spatula in her butt.
Is this kids being kids? Is this going too far? How do I tell her grandparents without putting them on the defense?

[tiredbuthappy]

Sounds like they may have been playing "house" and she was in trouble. In my opinion, it is going too far, but not because the little girl was being inappropriate as much as beating a child with a utensil on the rear is inappropriate. Children use dramatic play to explore social and family roles and she is probably reflecting her experiences. It doesn't sound like it was sexual in nature.

This is a very appropriate opportunity to speak to your son about private parts of the body, and how he needs to respect those parts of other people's bodies, and they need to respect his. Add that since we would never really want to hurt a person, it is not OK to even pretend to hurt them. As for the other child's grandparents, I would simply report what I saw without any judgement or implications of judgement. "I just wanted to let you know that I saw Suzie had pulled her pants down and asked Johnny to whack her bottom with a spatula." The break the tension you can add laughingly "you sure don't want her doing that in school so you may want to discuss it!"

[Tiffany2884]

The spanking part I can understand as kids being kids and playing "house" (Even though we do not discipline our son in that way)...the part that really concerned me was when she had him insert the spatula in her butt. I guess it was more her butt crack. As soon as we came home I talked with him about not touching and clothes staying on but as I mentioned he's only 3 so how much sunk in, I'm not sure but I'm going to keep mentioning those issues as time goes on. I just don't know what to think about that part of it all.