I would stay, but only for a while, and maybe only every second/third week. As much as it sucks, I would do it. In different circumstances, of course I would just stop going. But this is your chance to socialize, and make DS some great little friends. I think that you just have to try to turn off the part of your head that feels like they are watching and judging, as hard as that is. If you put yourself in a mindset of "I am doing this for DS, and for myself, not for the stupid control freak leader or the other moms" it may be easier, ya know? And after a while once those relationships that you need have been developed, you can transfer them to things like park visits or playdates at eachother's homes (although I know how small your apartment is!). You are right that it isn't the worst thing in the world for him to learn that sometimes he has to sit still and listen to instructions that go against what he wants to do. I do think that 2 yrs is really young for that lesson, and she sounds like a jerk, but... I would still go. Like I said, though... every second or third week!!
But if she is making you feel that bad about yourself and it isn't worth it, then don't go. Surely there is something else going on that day so you aren't butting heads staying at home? It would suck not to make friends, but if it is hurting you that badly then the potential friends aren't worth it.
Please don't think that I agree with her methods or attitude, though! She sounds like someone who shouldn't be working with young children. My advice is based on the fact that the group is what it is, and things won't change while she is there.
