I believe your T did not want you to believe it was any small matter which made it unethical for him to provide you treatment. While perhaps well meaning, and quite human, it seems to me his behavior is evidence of how distraught he is and how it affects his own judgement regarding certain kinds of interpersonal relationships.

Transference can go both ways and it may be that his peer convinced him that his current state of mind could lead to that occuring thereby jeopardizing the treatment you would receive from him.