Submitting to a different journal after "Major Revisions"

Law is concerned with the actions; ethics is defined by the reasons and motivations behind those actions.

• Unethical: Dr X employs an original method to improve his publications. Instead of spending a lot of time on literature review, improvement of his arguments and proofreading the manuscript, he simply prepares a first unpolished draft and sends it to a mediocre journal. The journals asks two or three experts to peer-review the paper; they voluntary spend their time to read Dr X's manuscript, spot the problems and suggest the ways to improve it. Dr X's collects the feedback, uses (some of) it to improve the paper, and sends the manuscript to a better journal. After a few iterations, the paper is accepted in a high-rank journal. Dr X is listed as the author, although the work is largely done by his anonymous peers.
• Ethical: Dr Y has spent a lot of time on her experiments and manuscript, before sending it to a journal. She is a bit shy and she chose a mediocre journal because she was not sure that her work deserves to be published in a better one. Two of three reviewers responses are very positive; one reviewer clearly did not understood the paper and requested a lot of major changes. These changes are unlikely to improve the paper; the reviewer simply requires to compare Dr Y's method with his own weak results from far far ago to get fresh citations. The editor takes the reviewer's point and requests the major review. Dr Y performed the comparison, but it is clear that there is no academic benefit in publishing it - the reviewer's method is clearly outdated. Dr Y decided not to include this comparison in her manuscript and sends it to another journal.

According your question, the fact that she doesn't want to make the revisions is also a factor for wanting to look elsewhere: otherwise, why wouldn't she make the revisions and resubmit elsewhere? You make it sound like the "major revisions" are not actually so major, and that your student wants to use this mostly as an excuse to try to trade up.

This may not be advisable, but it seems to me that it is wholly ethical. Your student submitted the paper to the journal in good faith. If the journal had responded, "We will accept your paper for publication conditional on making the following changes" then if the changes are minor enough, one could reasonably argue that she is reneging on the spirit of the bargain. However, by describing the revisions as major, the journal is indicating that the paper is not acceptable to them in anything close to its current form: they have in fact rejected the paper while inviting the submission of an improved form of it. They certainly do not guarantee that they will publish the resubmission, so the transaction is complete. The author can decide whether or not she wants to resubmit.

As I said in the comments, if the revisions ask for contain changes that objectively need to be made -- correcting issues of authorship, attribution, priority, or fixing what any reasonable party would agree to be an invalidating flaw -- then it would be unethical to resubmit elsewhere without making the changes. But certainly the author can make exactly the changes requested and resubmit elsewhere. Whether she resubmits to a better or worse journal makes no ethical difference whatsoever.