Whoa- this is a pretty high standard you are setting for teachers. I teach, and i certainly take responsibility for the instruction of the students in my 100 series class, but if i have to pick people to be on my team for a research project i am very, very unlikely to pick one of them.
Actually, I don't think that's a fair analogy. You work on your research project with your most promising PhD students, not the undergraduates (less still, the ones still in High School), but I'm talking about at a Milonga - just an ordinary local Milonga, not some special high level activity for the elite.
Any social dance event, whether tango or any other partner dance, is likely to attract a variety of people and a wide range of dance standards. At some, the etiquette requires that you are ready to dance with almost anyone, and there should be a 'good' reason to ever refuse an invitation to dance, while at others, we can be more selective.
I accept that if you are just attending (on payment of the entrance fee) a milonga that you have had no hand in organising, you have a free hand, but if your students happen to be present, I don't think that it is acceptable to just to refuse to dance with them at all. I accept the politics, and the numbers issue at a well attended dance, and I'm sure that it can sometimes be a little awkward, but once you have ceased to be just another social dancer, and have become a member of the locality's dance teachers, your position changes as soon as you are in the company of your own students.
I rarely dance socially, in the styles I teach, for this very reason, and then the 'problem' doesn't arise.