:soapbox: (bear with me this is going somewhere)
Are there bad Martial Arts schools that do well and they shouldn't be. Heck yeah. Are there bad Martial Artists who have won in tournaments when they clearly shouldn't have. Yep. Are there excellent martial artists who got their butts handed to them when faced with a self-defense situation. Sure. Just like any other industry or way of life (which ever way you want to look at it) there are people and places that succeed that should have failed and vice versa. But who are we to say that one way or another is not right, or wrong. I mean no disrespect to you or your instructor at all. I don't know either of you and have never met you. But in my opinion for your instructor to tell you that 98% of the dojo's he has been to are complete idiots seems to me like he is either: a little full of himself, a little old fashioned in his thinking that his style is the right one, or maybe in your area it holds true. I want to make it clear that I am not bashing him or challenging his or you beliefs but stating my thoughts on this topic. From the story you told in here is seems that your instructor may not be on good terms with these other schools. I am sure if he has said that to you, he has told others, and we all know how the world works. People talk. And I can guarantee you that his words have gotten back to them. And if they know that your instructor feels that way, to them by you coming in wearing your schools shirt and asking to watch a class, they may have just wanted to avoid any problems that my arise, such as you challenging their knowledge in front of their students. I am not saying that that is what you were going to do. I am just trying to look at it from their side.
Also, if you were watching them through the window. Isn't there a chance they may have seen you and your instructor watching? Then when you come in without your instructor, it does "look" fishy. Even if those were not your intentions. If you truly wanted to get a look for yourself, your best bet would have been to go in without any sign of school or style affiliation and ask questions. When the time is right, or if they ask if you do train. Be honest and tell them. By that time, they will have a feel for your intentions and not be as defensive.
My opinion comes from a sort of similar experience, except in our case there was a school(not open anymore I might add) in town,and it was no secret that my instructor, nor most of the people I knew did not like the guy. The way he ran his school reminded me of the Cobra Kai Dojo in the Karate Kid movie. All the students always wanted to fight and they traveled in a pack, they always got angry when they got beat sparring, or if they lost a fight there was alway an excuss. The Instructor quite honestly was a Punk and a crook (big surprise his school failed). After all, look at the crowd in his school. One time a purple belt from his school came into our school and watched a sparring class, he was snickering and making comments like he could beat everyone. Finally my instructor got fed up with it and told him he was welcome to come in a spar. He then said he had no gear with him, so we supplied him with some. The guy got stomped, and I don't mean beat up, but he got embarrassed. Needless to say many of our minds were tainted with the image of the students that go to this school. Well, some of the Black Belts wanted to continue training at our school and use the floor after their original school shut down. Most of us were against it, and our instructor talked it over with them and made it clear what type of students (and some names) were not welcome in his school. Then, the 2 Black Belts added to the list of students that would not be coming, that was cool and took some courage in my opinion. Now, two years later. I have two more good friends and a more open mind about this whole subject.
Sorry about the long post, but in short. Don't give them something to be defensive about, and don't group all students or instructors into one group because even in a bad school there can be good people, and the other way around. But I want to make it clear that I don't disagree with what you were doing, but they way it was done. You have to try to look at it from their point of view, especially if they are at odds with your instructor. Because if they don't get along with him, you will have to prove to them that you are not out to try to make them look foolish. I will now get off my :soapbox: