I only seen this post after the edit - so I don't know the ages of the people involved. However, I have worked in the law enforcement field for a number of years and have seen many cases of children (and adolescents) molesting other children.
Report it - it's the best thing to do for a number of reasons. (1) stop the molestation from continuing with other child/victims, (2) the child/perpetrator will most likely receive treated through counseling - something they need as soon as possible, (3) the child/victim may also get free counseling - depending on what State you are in, (4) this child/perpetrator learned this from someone - and that someone may still be abusing them also - if not other children/victims. A police investigation may reveal who that person is and stop them from continuing the cycle of abuse also.
I know it's hard - but trust me - do it!