His exact words were "What's the difference between some one who graduate from medical school with a C and someone who got an A? Nothing, they are both called Doctor."
1. The correct set-up/response is: Q: "What do you call someone who graduated last in his class at (Fill in the blank) Med?" A: "Doctor." And no, I'm not going to quit my day job and go into stand-up comedy either.
2. Very few med schools give letter grades.
3. Outside the world of medicine, the only people in academia who insist on being called "Doctor" are individuals who have earned the Ed.D. and Th.D. Degrees. Everyone else laughs at them behind their backs.
4. In my experience, aikido promotions by recommendation were usually terminal promotions, and have about the same relationship to promotion by testing as an honorary Doctor of Humane Letters does to any kind of earned doctorate, medical or otherwise. For further edification on this point, search for "Dr. Stephen Colbert, D.F.A."
5. What Rupert said. While the spousal aspect is an interesting twist, almost everyone in the martial arts has experience with at least one chief instructor obsessed with keeping dan rankings in lockstep with seniority. And yes, it's always toxic.
My only advice is that you train for the training, not for the grading; consider what your broader training goals are and keep looking for a healthy alternative to your current dojo, even if it is isn't aikido or -- for that matter-- even if it isn't martial arts; don't expect sclerotic organizations that have been fostering this kind of silliness to change; do expect to be bad-mouthed behind your back as having lacked some essential quality necessary if you leave. And apparently you do lack the ability to turn off your bullshit detector at the door, which is a problem in many places, so there.
Best of luck to you.