Varga's advice is excellent! I don't have much advice to add to that, but I did want to point out a couple things.

By disciplining her in this way, she is learning that the child presents even more of a threat. She is not making the connection that she is being punished because she gave a warning growl. She will see it that the child is even more of a threat to her established place.

By restraining her, you actually increase her defensiveness because she is restrained. Most dogs are more likely to resort to aggression when leashed than if they have an option to back off to a perceived threat.

I don't feel she needs to be taught that anyone can make her feel threatened and she has to suppress any response even if she is anxious (and for a dog, losing a toy or item IS a stressful situation for them; especially if simply taken away and left with nothing). I feel what Ruby needs is to learn there is no threat, which is what Varga's and Cataholic's posts address very well.

I hope you are able to work it out and have more peace of mind soon.