Reflecting on this thread, I don't think teacher/student relationships should be legislated against, but it should definetly be acceptable for schools and teacher accreditation organisations to set rules regarding relationships, such that it may affect their business and reputation.
The same applies in the example of psychologists above. It's not legislated against (afaik), and shouldn't be so, but the accreditation body for psychologists deems it grounds for revoking licences, and fair enough too, with harm it could potentially cause to the reputation of their profession.
Basically, the free market does it all. Businesses and accreditation bodies will prohibit these sort of potentially exploitative relationships because to allow them could be severely harmful to their reputation and returns. The right for schools to dismiss teachers for this reason must be upheld, but there's no need for compulsory legislation.
