I am not going to comment on the rights or wrongs of the Cabin Crew's reactions, but what does concern me is the tiny writing at the base of the packaging where it states
Not suitable for children under 2 years*
Words fail me!

Surely today we know enough about the harm which smoking does, so why do we allow such a "toy" to be sold? Children DO learn by example and allowing them to "smoke" these things is irresponsible. Maybe the bad example being set might have been something to point out to the offending passenger.
* It is difficult to read the exact age but it is a single figure.