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You seem to have Carmen Sandiego the game confused with Carmen Sandiego the character? In-setting, she isn't an educator; she's a thief. She steals stuff. Ridiculous, over-the-top stuff. Their favourite TV characters, all the world's ice cream, etc.
To be sure, if CK hadn't mentioned the bit about "don't actually harm the kids directly" and Chie is seen as willing to act out of character for the sake of winning, she'd have a pretty good argument - kidnap the kids one by one and throw them in the TV, Adachi style, and encourage the rest of the class to tune into the Midnight Channel to watch their friends slowly starve to death while cowering from evil shadow monsters lurking around the corner. Who will be next? That seems more terrifying than an out-of-character Carmen doing something similar with a stolen gun.
However, aside from the "Chie acting wildly out of character" bit, this is restricted to less deadly forms of scaring kids, which is definitely for the best.