In a state of nature, 'bullying' among humans a) asserted rank, b) ensured that members of a group grew strong or perished. Bullying worked in the interest of the bully, victim and other members of the group. Optimally a bully ceases to be a bully because his victims fight back.
Nowadays there's no future cooperative environment that limits and gives purpose to bullying-- and ultimatley reconciles both parties. Kids don't necessarily need to be 'toughened up' because most societies are cushy, and bullies never see the worth of their victims -- fundamentally the problem is the environments where kids interact ie. schools, they are partial, temporary and don't encompass enough of life.