It probably was not right for the lady to shake the child.
On the other hand, what options do you have when diplomacy breaks down and the FAs concede there is nothing they can do? (Of course, in this case, the lady did not try diplomatic means first - a fault on her part - so my question should be taken in general context).
In fact, what would you do if it was an adult who was putting their feet on your seat back, or kicking your seat (I wouldn't know why, but let's just say you had a bit of an argument pre-boarding)? Surely you can't pick up the adult, shake him/her and plonk him/her back down expecting them to sit still (esp. without perhaps expecting a "favour" in return fire).
Suing the lady who did the shaking is probably much, unless the child sustained real physical injuries.