Applied correctly and under the proper circumstances, that technique is totally legitimate. It doesn't require the thrower to be stronger than the attacker and being shorter actually helps.
I want to start with a caveat -- I wasn't there, I don't know what was going on, and I don't have anything but your words here to put some pieces together... Don't view this as an attack on you, so much an observation or perhaps a different perspective based on what you've posted. (Yep, that means it may well feel like an attack.)
In many cases "compliant partner" means providing the attack the technique works against. I often catch students giving attacks that would require a different approach (forward energy not present, etc.). Just because a technique doesn't work on a given attack, that doesn't mean it doesn't work. A rear naked choke doesn't work if the guy is a step away, facing you, has his hands on his own throat, or a hundred other reasons. But it does work when used properly. The same is true of the defense in question. In many standing grappling arts (perhaps all), one of the most important skills is being able to recognize which technique fits a given situation.
If a person is learning a technique it really is bad etiquette to resist at first. The person is most likely trying to get his footing, and start to work on the breaking of balance. I by chance, also went to a jinenkan dojo the same day you had your lesson, coming from a Daito Ryu and other arts background I went with the pace and flow of the school. What was being taught was a particular technique done with little resistance to ensure the lesson, concepts and foundation were being used. To me, the gem to be found was not so much in technique but the concept of distance and timing and distribution of attack. Seeing an arts public face is not the same as seeing an arts true face which often times is only shown to people who have practiced the art for some time.
The issue here is that there is no technique that will work against every version of that grab. None. So, it's okay to give an appropriate level of resistance, but the resistance has to be in the direction that makes the technique available, or you're just countering the technique and he won't be able to demonstrate it. Let me give you an example. One early application to a Leg Sweep I teach is from a frontal choke (the Hollywood Psycho choke). I use that one because it's an easy one to execute the technique from and tends to show up common errors pretty nicely. The technique will work if the "attacker" stands still, though it's harder to do that way. It works really well if they do a natural choke-and-push attack. There are two things you can do that will stop the technique (as taught) really easily: stiffen your arms, or pull back while choking. Now, there are plenty of things I can do with either of those, but neither lends itself to this technique. One of them is just unrealistic (stiff arms), and the other is awkward and unlikely (pulling back while choking).
