As an instructor who creates silt-outs for training in both wrecks and caves I'd be very interested in the specifics of the overhead in which the instructor chose to demonstrate silt-out conditions. There are relatively safe places to conduct such training. Perhaps the instructor was trying to encourage you to experience something that can be extremely stressful to divers in a location that is safe for such training? However, maintaining student or group control in such environments in zero visibility requires highly specialized instructional techniques and through training in touch contact and guideline deployment.
Some agencies prefer instructors to simulate zero visibility through the use of blackout masks which allow the instructor to better lifeguard a student, but this is done at the expense of allowing the student to really experience what silt is capable of doing to visibility and to experience how patience and stillness can help matters. Blackout masks make training safer, but perhaps jeopardize the diver who finds himself or herself in silt for real for the first time without a lifeguard. Real silt-outs in training make training more dangerous, but perhaps help reduce the stress of a real silt-out when it happens for the first time.
There is a saying that "the more you bleed in training, the less you die in combat," but the training environment needs to be one in which combat is less likely to occur. Make no mistake, there is no such thing as a safe dive. We kid ourselves that "safety" even exists. We can do our best to minimize the likelihood of an accident, but there are no absolutes.
While you did the right thing by saying, "No way!" since it was beyond your idea of comfort and safety, perhaps you should be flattered that the instructor thought you were diver enough to handle such an educational experience.
I can't judge the instructor's behavior based upon the information provided. Last week, I found myself in a total silt-out that was created by my cave instructor candidate 300 feet inside a low silty tunnel when he played a panicked diver on the long hose for a student. He didn't realize that his actions put me in it for real as I was behind the team and off the line. I should have been on the line in anticipation of any possible problems during their gas-sharing exit, but the tunnel was such that I couldn't get lost. I did however get stuck since the line was run through a line trap which required negotiating the problem in zero vis. The silt-out was created at the end of the day just prior to the park closing where it wouldn't impact the safety and enjoyment of others and we were 100% known to be the only team in this particular location.
After the dive, I suggested ways to make that situation safer for future training which the candidate agreed would have been better. While a highly skilled and experienced cave diver and training director for another organization, the candidate wasn't perfect. No one is perfect. But, unless the situation was truly dangerous, I wouldn't sweat the small stuff. Most instructors are out there doing their best to teach in an industry that all but blocks their efforts to learn how to teach better and safer courses. I have offered to teach instructors how to teach such things more safely, but thus far no dive center has been interested.