I feel you have a right to be upset. If what you say is accurate and not some error or misunderstanding (which it sure sounds malicious and intentional), then this is out right fraud and you should persue it as such by both civil and criminal means. There are FAR too many instructors (though even one would be too many) who pull this on their students and I think they should be held accountable for it.
Since this thread ended before I even joined Martialtalk, it's probably a moot point, but just in case anyone is interested in IMHO on the original topic, I'll throw in my .02. The only time my kukkiwon certification was of any benefit to me was when I was fighting on a national and international level with that org. Also, it got me a "master's pass" at the 1999 nationals. I do belive though that it IS important to have a certification from some recognized national or international body, whether it be ITF, WTF, ect.
That way an outside source (for example a 1st or 2nd dan moving and wanting to join a new school) will have a solid idea of at least the minimum requirements and base standards you have been traind under. My area has WAY too many independent schools (which in itself is not neccesarily a bad thing) that sell black belts in a year or less (which obviously IS a very bad thing all the way around) and the students come over to me wanting to be recognized.
I am a multi-style kind of guy and I've got a bunch of rank certificates in a box in my school's storage area from a lot of different orgs (including my kukki). I think that the value of the cert. is to a large extent as valuable as the reputation and the standards of the org. that issues it.