GnutherGnu yes I re-read the newspaper article, thoroughly this time and i realise that the caning incident took place without a doubt.
When I read it last night, I skimmed some bits, apparently !! 
Yes, I would remove my child, even if my child's instructor was someone else unrelated, and even if the accused man is a several-times-world-champion-gold-plated-diamond-encrusted-God in that sport, who had never appeared violent before and is not teaching anymore. I would not keep my child in a club associated with such an incident. Otherwise it means you are condoning the violence against the child.
By the way, not all self defence clubs are cultish. My dd does judo in a very "democratic and fun-filled" club where several instructors have their own kids there. The classes are really fun; during warming up and cooling off times instructors make them do games like playing tags and wheelbarrow etc with lots of giggles and most importantly it's held in a massive hall with parents watching and giggling too. Instructors' own kids do not get any special treatment, they get told off just like anyone else. There is a great atmosphere of friendship and suppport there. Admittedly I'm talking about judo, so it might be different for tkd. But still, I cannot imagine any club of any sport where your child gets beaten up by the instructor and parents give written consent or show support.
Having said that I can see why people say these sports are cultish due to the unquestioning display of "respect" and bowing to the "masters" etc. As far as we are concerned, bowing to each other is a traditional ritual they do at the end of each lesson end and we don't think any more of it.
And i agree with some previous posters, in decent professionally run clubs, the punishment (for breaking the "rules" ) are either doing several sit ups, or push ups, or running around the hall 10 times with touching the floor at every corner etc. Nothing like caning, no unnecessary touching, no shouting on your face take place and there is no reason.
There is no such rule in any sport where corporate punishment is dished out by the so-called master. It's bullshit. I don't think it's part of tkd either.
We wouldn't smack our own children, how on earth it is acceptable for a so called "master" being able to use cane to beat up our children ? No way. It's criminal.
I'm glad UK is pretty good with child protection measures in such places.