Certainly I could have done things better, but the question remains -- what do you do when an instructor or divemaster is out of line? Of course, you do your best to safely get out of the situation first, but then what? I feel like if we just turn the other cheek and say "jerks will be jerks", that's nearly as bad as condoning their behavior, and it makes it more likely that things like this will keep happening.
First of all, it's great that you are actively questioning what an instructor or DMs tells you to do. You should. This kind of questioning is indicative of an assertive diver who takes responsibility for his own safety. It also protects you from making a tragic mistake should you encounter a dive pro that tells you to do something dangerous. Dive pros are human. As such, they make mistakes and experience lapses in judgment, just like anyone else. Some instructors/DMs are great, and some are pretty crappy. The ones that clearly place their students in danger should be confronted (tactfully to allow for the possibility of a misunderstanding/honest mistake) and, when appropriate, their employer/agency should be informed. Safety is paramount.
In analyzing what happened, I think it's helpful to see things through the eyes of the instructor in question.
Dive type: wreck dive with swim-throughs
People involved: instructor, wreck diving student, former student, and a diver with a fair amount of experience (50+ lifetime dives)
Cool factor: swim-throughs are fun, lots of divers really enjoy them
Perhaps the instructor thought very highly of you and your buddy's dive skills. In his mind, the swim-through presented an opportunity for the two of you to expand your dive experience a little. His insistence (and persistence) in asking you to do the swim-through might have simply reflected an enthusiastic desire to share the novelty of the experience with you.
Everyday scuba instructors coax students into pushing the boundaries of their comfort level. In extreme cases, some students progress from being afraid to breathe through the reg underwater to really enjoying the sport, so much so that they can't get enough of it. For many instructors, being able to facilitate that transition from anxiety/reluctance to pure joy/enthusiasm is perhaps the most gratifying aspect of teaching scuba. That being said, in this case, the instructor clearly misjudged your comfort level with the swim-through.
You seem to have a very negative opinion of the instructor in question. I can't help but think that this view was colored by your post-dive interaction with him. Having not been there, I don't know how you confronted him, what was said, and how he responded. It sounds like you were pretty emotional after the dive, and this may have set a contentious tone for the conversation. Maybe things would have gone better if everyone had been allowed to cool off a bit first.