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This has all been said on here already, but figured I would beat the dead horse some more.
Several people have commented on how to proceed at this point, and terminating the agreement and getting a refund should be your first action. (I would suggest that you DO NOT start out by telling the instructor that you posted your experience on ScubaBoard and got feedback indicating that he is a bozo.) See if a mature, objective approach works - you did not have what you felt was a good training experience with him, you did not feel safe, and you don't believe it is in your best interests to continue with him. Don't mention reporting him to the particular training agency. (Although, if he refuses to refund part / most of what you paid, you could consider mentioning that your cousin Vito, from Detroit, is in town and would like to come speak with him about his kneecaps.
) Seriously, the next step would be to approach the shop where he works (presuming he is not the owner), and request a refund. From your description, I doubt that requesting a copy of your training record would be of much value, but that should ordinarily be done as well. 
It partly depends on what the conditions are like where the ocean dive takes place, partly on the readiness of the student diver, and partly on the objective of the dive. If this was a PADI course (since that's what I'm familiar with), it's permissible to take students on an ocean dive almost immediately, but the conditions at the dive site have to be quite ideal--shallow, clear water with minimal water movement. The PADI system encourages instructors to get students into the water quickly--it's called the "Dive Now" approach. However, we are also required to assess student readiness, and in cases where students are anxious (for example, if like you they have little experience with the ocean), it's always advisable, though not required, to do an introductory pool dive first. This may be what the instructor intended. The first ocean dive in a Discover Scuba Diving experience (which is not a course leading to certification), can actually count as the first open water dive in an Open Water course, regardless of whether a pool dive was conducted beforehand. Furthermore, we are able to offer additional open water dives after that first Discover Scuba ocean dive without additional confined water training, but these won't count as training dives for the purposes of the course. Just a couple of weeks ago I had a student who told me he was anxious about diving because of a fear of the ocean but had made it a personal challenge. I took him to the pool for a little over an hour, and then the next day I took him to the ocean for two dives. It was very hard for him, but he did both dives. Because he didn't continue training, neither of these dives will count towards any eventual certification, but if had decided to change his travel plans and complete the course, I would have been able to count that first dive as a training dive for the OW course. In other words, given the objective of the dives I did with this student (Discover Scuba), a short pool session (a little over an hour) followed by two dives in benign conditions was fine, even for a markedly nervous student.
It's normal to feel pressure in much the same way you do when your car goes down a steep hill or when a plane is landing, but it's not normal to feel acute discomfort. One trick is to pressurize the middle ear before you even descend and then on each breath during descent. That way you actually prevent the pressure from building too much in the outer ear.
Of course not. Most instructors are not drill-sergeant types. Most of us go out of our way to motivate our students through learner-centered, positive approaches rather than trying to motivate them through humiliation, name calling, and raised voices. Some students do quite well with the "hard-ass" type of instructor, but I think most do not. Scuba is supposed to be fun, and learning scuba is supposed to be fun. In fact, the teaching notes for my agency start right out with the recommendation to "Make it fun!"
Absolutely. Almost everybody gets anxious at some point in their training. For some it happens the first time they stick their faces in the water; for others it happens the first time they step off a boat with all that heavy gear strapped to their bodies; for yet others it happens when they look up and see the surface of the water at a height above them they would normally associate with the roof of their house. But almost everybody gets over the anxiety gradually.
No, it wasn't good, but yeah, you're probably a bit more anxious than the average student. It's important to know yourself and to choose your training format not primarily by price (which you seem to have researched, eventually choosing by proximity since all courses were similarly priced), but instead choosing it according to whether it's a good match for your specific needs given your individual psychology. If you're normally a worrier (you said you wanted to be extra cautious in cleaning gear), then a group class that whisks you through may not be a good match for your needs as a learner. If you are not self-confident in the water, perhaps you need a very caring and patient instructor, in which case you can interview prospective instructors to see which one you seem to "click" with.
