There's obviously something going on with the 'poo' thing - DS1 has been poo this, poo that since he started Reception in September. He's also discovered how hilarious belching is (although thankfully has not yet got strong feelings about farting). I don't class this sort of thing as rude so much as immature, and he is immature, on account of being 5, so I don't make any comment usually.
With 'idiot' and 'stupid', I'd probably make a decision based on the tone of voice that was being used - if she's being aggressive or sneery then that's rude and warrants time out or whatever it is you do. If she's just saying 'stupid' but giggling about it, I'd just ignore.
A lot of ignoring goes on here, as you can probably tell...