What Happened??

As my profile states, I am a mother of four. My youngest just turned 8 a little while ago. He is the baby of the family and I do tend to coddle him above the other three. ( by coddle I mean 'baby' not favor.) He has always been a very sensitive boy. Caring and compassionate, nice to others, never causes trouble... that kind of keeps-to-himself boy. I was called about an hour ago from his principal that he and two other boys had roughed up and bullied a couple much younger kids at recess. I am stunned!
Bullying has never been something I tolerate, even in strangers I am the type to step in and intervene so this news has floored me! How could my little man, who is so sweet all the time, suddenly behave so terribly?
Now I know some people will think, well open your eyes a bit more mom, it's probably been going on awhile... but trust me when I say it hasn't. I keep a very close eye on these things, my husband works at the school they all attend, and I monitor their movements closely. The principal called me because he knows my children personally and was as stunned as I was. Gratefully he was not suspended, but will be having indoor recess all next week with his principal to be taught more on the effects of bullying.
I am at a bit of a loss over how I should approach this. I am most certainly angry and hurt that he was capable of it, but what would be the best form of discipline??
I am currently searching my heart for some Godly advice on this. He needs to understand my passion on this, the because I said so- just doesn't fly sometimes. There is nothing beneficial to it, not to the victim or the bully. But he's 8 so having a lecture drone on about it makes no real sense either.
I'm just so injured by this. I shouldn't be taking it as personally as I am, I know this. I'm not concerned with how my parenting may look to others either. My soul concern is he realize the gravity of the situation.
I had to get this out. I feel a little calmer now. He'll be home soon so I need to go pray and find some guidance for this. I'll let you know what I decided in time.