K.N.
It sounds like typical 3 year old behavior to me and honestly, the school overreacted if there is a question that she will be expelled or "uninvited". I mean, she didn't push, hit or slap another child, right? Perhaps I'm not visualizing the full extent of her behavior. However, the teacher should have been able to step in and communicate why those responses were inappropriate immediately afterward. Besides, small children are often told to "use your words" to express frustration... ok, she did. Maybe they weren't pleasant words, but it sounds like she's doing the best she can as a 3 yo.
Plus, you have a young baby in the house too... That's a big adjustment for her, especially as the baby gets more mobile. I have several friends who told me that their older child go through phrases where they re-claim their toys and possession as younger siblings get more apt to investigate and/or play with those toys themselves. Is sounds like she might be entering another readjustment period to the baby and being a big sister.