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

By turning them into either a silent E-1 in formation or a loudmouth E-1 in their way to a discharge. Maybe come straight out with those options to them during a counseling seesion. Let them know next time those two options will become their reality.

If that E2 doesn’t respect you as his Squad Leader, Section Leader, or Plt Sgt then there’s definitely something wrong, might he thinks he or she doesn’t need guidance or refuses to follow orders or directions, then write him up for insubordination and if that still doesn’t work, take him somewhere, where there’s no one around and have at it, then see if his attitude changes, that should be the last option, extra duty works also, a months worth’s, 7 days a week after work till 2300 hrs

As an E-5, I've actually run into this. I pulled the PV2 aside, brought him to my first line so I'd have a witness, and smoked him (It was the first time the PV2 tried something like this). After, the PV2 then did the job and I followed up with an after action review. They didn't mouth off again after that.

Immediate discipline in front of the formation.

I would have the remaining troops in formation "standfast" and pull the insubordinate warrior offline. I would then ask the insubordinate warrior does he/she believe his/her fellow warriors have his/her back? I would then ask the insubordinate warrior does he/she think I have their back? No matter what his/her answer would be, I would put that insubordinate warrior in charge of that day's details and have him/her report to me once all tasks are complete. This junior warrior needs to learn loyalty and respect. If his fellow warriors are true to Army values, they will give him/her that.

A lot of these comments make me happy I seperated in 2010.

That PVT would be in the front leaning rest position until the end of formation. Afterwards he/she would be doing front-back-go, picking cherries and putting them in the basket until I got tired.
That's how I learned as a Private.
One comment, Praise in Public and Punish in Private.... Our military is not what it was.

As id you do not already know. Discipline the entire squad.

Nobody today is a draftee. They're all just volunteers who joined "for a job" and a sign up bribe. Maybe they've got a better job offer outside and want to terminate their contract?

Wall-to-wall counseling isn't allowed anymore.

Half an hour of the dying cockroach and the section will STRONGLY encourage the young E2 in the error of his ways.