Your rules as you say but do you not think a bit of subjectivity might be useful here?
Saying “what?” Isn’t rude or offensive, it’s just something your family doesn’t do. A lot of families would consider “pardon” worse.
I would be mildly ticked off if a teacher corrected my child for saying something I don’t consider rude and asking them to substitute something I don’t like in it’s place. Wouldn’t die in a ditch over it but surely you realise people have different opinions on this. It’s clsss mores as opposed to something which could cause widespread offence.