What's really impressive to me is that you had the sensitivity to notice that the third child's reaction was different than usual and to follow up appropriately.

seconded.

I'm pretty impressed in general. It may have been less embarrassing for all involved if done in private, but sometimes time is of the essence where lessons are concerned.

Is student 3 someone who is often teased? If so, I think they are the least likely to feel your judgement was fair. They may require a bit extra empathy over the next few days to drive the idea home that your lessons come from a place of helping, or they may become resentful.