((((((((((Hugs)))))))))))
I would never not hug a child that comes to me with open arms. I too teach in an area where lice , ringworm, and plain filth are a problem. These children spend more time with me than their own momma so I greet them into my classroom with a hug or a pat on the back and as they go to their busses after our day I hug them each good-bye. I have had some that their hugs last too long and so I nicely tell them that hugs are nice but "hangs" are too much and please let go now. Also, there are the ones that want those hugs every spare minute and I have had to tell them that there is a three hug a day rule and we keep count as the day goes on. (not counting the hello and good-bye hug)
I think the children that you teach aren't breaking any boundaries if you are someone that they have come to know, trust and love. However, if you don't want the hugs you could tell them that yes, you do love them. but you aren't really the hugging type and from now on how about saying hello with a high five or a hand shake. I think these children are needy and they are looking to us for reassurance that they do matter and are loved in this world!
BTW this is my 15th year teaching and I have never caught anything from them besides maybe a cold or two! I have long hair that I wear down and I have never had lice. I do spray in hair spray daily since my hairdresser told me that the lice do not like it. Also, lice don't jump they have to crawl and they are not really quick, so it would have to be a long hug for them to crawl between two people.