When I'm teaching a class what I say goes. There's no room for being "Fair" in being Safe.
Again - I'm an advocate of BP&W and I like for my students to wear them. But the instructor is in charge and what he says goes. In this case, I think most of us think he's nuts but it's his class.
Our OP should look take a positive spin from this. A good diver/DM should be able to grab any gear config off a shelf and dive it proficiently. So this is good practice with alternate configs.
No, sorry I can't see how he is being safe. He's making a judgement based on his own feelings rather than looking at the bigger picture.
We're talking PADI here, so we're also taking sales. If the DM turns up in all his won kit, then he's listened to the PADI spiel and presented himself looking like a role model. This is the what PADI wants. The instructor will be wearing his own kit, so should his DM and the students will be in rental kit, this should elicit questions on owning personal kit. If the DM now switches and looks like a rental drone what example is he setting?