Report it immediately.
For one thing, the sooner you report it, the sooner they will have chance to deal with it so that the show can go on. And if the show does end up being cancelled, it's better that it should happen as soon as possible.
They are charging admission, right? I'm only asking because one poster seemed to think they weren't, but I didn't notice fiyero saying that.
As for ITW, I think that Sondheim and Lapine have probably accepted that productions, especially school producitons, are going to add characters. In fact, the excerpts from ITW Jr. performed at Wall-to-Wall Sondheim had an awful lot of kids onstage.
And I think that all the licensing agencies understand that small theatres are going to have to make some changes sometimes. Whether action is taken against a theatre depends on the specific changes.
But I think they're not so forgiving about not receiving payment.