Kim,
I'm sorry, but I have to say this. It sounds like you're about to go up for your checkride soon. At that point, you won't have your CFI with you anymore and you're going to be the one responsible for determining how every event impacts the safety of your flight. It really is time to start thinking critically about things like this and determine just how comfortable you are with them.
CFIs aren't infallible. "Tests" like this can turn deadly. I rank crap like this right up there with instructors who pull the mixture on downwind to see how you handle the engine really quitting. There just isn't any reason to do it...and even if he DID do it, why would he choose to do it that low? He left you absolutely no outs. He could have had you climb to 5000-6000 feet and had you set up for a power on stall and done it there. Then, if you panicked, at least he would have had time to recover. As it turned out, you handled it well...but what if you hadn't? What if you would have grabbed for, and pulled on, the yoke? What do you think his plan was? To overpower you? Are you willing to bet your life on the fact that he could have?
Some may disagree with me. I honestly don't care. There are ways for your CFI to drill Cessna's seat problems into your head without endangering both of your lives. Really, honestly, think about what could have happened and then decide how you feel about what he did to you that day. Don't just assume that, because he is your CFI, he made the right decision. In my opinion that he needlessly bet your life on the fact that you would react correctly and that if you didn't he could get you out of it. I'm not convinced that plan B would have worked.
I really like you and I like what you've brought to our board. I know you're a student and I'm not trying to attack you or beat up on you. I just can't understand why what he did doesn't bother you a little.