D..
I'd talk to the police anyway. I really would. Wouldn't you feel just awful if something happened, and you hadn't taken any action?
The woman needs a stern talking-to from the police.
Years ago a kid came to play with my sons and he kept taking off his seatbelt. I pulled the car over and just sat, with the air conditioning off. My kids knew why. They told him that we don't ride in a car without the seatbelt on. He finally put it on. It took 3 times of pulling over to get it through his head that I wouldn't put up with those shenanigans.
The problem isn't that child. The problem is his mother. She needs a consequence from someone in the position of authority.