How would you react to an E2 who "smart mouths" you in formation?

They would be doing a lot of extra duty and speaking with the First Sgt about disobeying a Lawful order.

Tell him one more time or pay the penalty of disobeying a direct orders

Push ups. Then give the rest of assignments and send the rest on their way. Then give him a chance to explain his actions and explain your. (ie you never disrespect a senior person in front of anyone) If you can not follow an order in peace time when TSHTF you won't have to worry about following any orders after that. (ie coming home in a box)

Smoke the dog piss out of them, then the whole team, squad, platoon..... If the problem doesn't resolve itself through a platoon beatdown, then counseling statement and Arty 15. Then a move to a new platoon then a field grade. Then its now longer your problem after that. Unfortunately the days of the woodline are gone. But being on deployment there's no rules as far as the infantry in concerned. We even had a guy shoot himself in the leg on deployment, to get out of deployment.

I'd make sure he knew his place and made sure he had shit detail for a week

He was disrespectful and insubordinate in front of the unit and he must experience consequences severe enough so that others in the unit won't engage in similar conduct. Praise in public, criticize/correct in private but punishment has to be public and severe enough to deter others from engaging in similar conduct.

STEP 1: E-2 ON MY COMMMAND FALLOUT, REPORT TO THE 1SG OFFICE AND TELL HIM I REQUEST THAT U BE RELEASE OF ALL YOUR MILITARY OBLIGATION'S AND TO GET U BACK HOME QUICKER THAN CAME ."FALLOUT"

I'd say a return to training status, grass drills til he pukes. THEN, without showering or brushing teeth or wiping off his shoes... THEN perform the assigned task to standard in front of the whole unit.

Discipline. One on one. At that moment.

Square that shit away asap