OP ought to be asking a different question: AIBU to dole out party bags for a party that's not happening?
Leaving aside the "bad" child, it's a completely batshit idea. No party, no bags. If you absolutely have to, do as PP have suggested, and send in some mini bags of Haribo or something.
And, no, you obviously can't leave anyone out if you are going to send something to school (though I can understand why you might want to).
I would follow up the other problems with school - though do be a bit cautious. If your child is hearing bad language at school, it is not necessarily coming from this particular classmate. There are lots of 9 yr olds with older siblings who don't moderate their language when they should do. That happens in all schools (I remember one girl in my DD's class who used all sorts of choice language which she had learnt from her older brothers - and that was a small independent class of naice little girls).
The other boy putting his hands round your son's neck could either be a seriously vicious act, or it could be boys being boys. It's impossible to know. This sort of thing is a complete minefield, especially with children of that age. They are all capable of exaggerating, especially in order to get another child into trouble. They are also capable of behaving in deviant ways - almost always as a result of something they have witnessed or experienced at home.
Racism is not on, and the whole class needs to have this reinforced in PSHE or whatever it's called nowadays (again, no point singling out any one individual). This is something schools should take seriously.