I hate the word "loo". It's a such a mimsy-wimsy, fussy little word and it puts my hackles up. It's right up there with "doily". However, I think the school are being a bit ridiculous. As long as they're saying "please" and not calling it the shitter, and it's clear what they mean, I don't see a problem.
I go to the bog* or, if I need to be a bit more polite, the lav. Occasionally lavatory, but more in an ironic way. Toilet doesn't trigger the hair on the back of my neck, but I don't like it. I can live with it though.
We have such a wealth of words for lavatorial facilities, I think we should make more use of them. Today it could be the heads or the house of easement. Tomorrow it could be the privy and the latrine the following day. There are some fab foreign words, too, I particularly like the German "Kackstuhl", although I'm not sure if it's polite. Think how educational that would be.
When I was at school, we had to ask to "be excused". I came home and asked my mum why having a wee was called being "excused".
*Having thought about it, if I'm in familiar company, I usually say I'm going for a piss/pee/wee according to who's present. I try very hard not to say piss in front of DGD!