I was once in the supermarket and heard a little girl squeaking "Mummy, mummy, that lady's a witch! Mummy, Mummy, look a witch!"
I turned to look, wanting to see the witch and saw that the little girl was pointing at me. At which point her mortified mother hushed her and scooped her up but the kid was still pointing, obviously thinking her mother hadn't spotted the witch. I just grinned at mum and kid and went on with my shopping.
But in my case the mother was embarassed and the kid very young. I think what happened to the OP was much ruder. I wish she had said the line from Wizard of Oz. I think that would have been a humorous response to rudeness.