I'm inclined to agree with your presumption of idiocy instead of malice; that the driver just didn't know the connotations of "Lolita". Yet the word still makes parents think their kids are being preyed on all the same. I'm not judging that this is what the driver meant to do, but it is something that would make parents not trust the bus and harm the children forced either to wake early and walk to school or contribute to the emissions in their air.
It's still possible the driver is given a second chance at bus driving. And in the worst case I doubt the driver would not be able to find employment in public transportation.