If that's business, that's a poor sense of ethics. Call it stupid if you like, but what he did was disrespectful and personal, and if he did come back with $1,200 that deal is off the table. I do not need to sell the car, I'm not going hungry or unable to pay my bills with it just sitting there; I can afford to tell him where to stick it.
It's only a personal thing if a seller, or a buyer, allows it to be. I remember going to a car dealership with my Dad and sister one time. We were looking to get a car for my sister to take to college, and Dad and the salesman were just going at it. They were debating, then arguing, then name calling, then my Dad stormed out and my sister and I were so frigging embarrassed about the whole spectacle we never wanted to go in that dealership again, or go car shopping with Dad.

Then the next day, Dad says "we're going back to the dealership", and he drug us along even though that was the last place in the World we wanted to be. We walk in the door and there's the salesman and my Dad all smiles, shaking hands, and asking Lora if she wants to go see her new car! We were shocked! We thought that salesman was going to throw all three of us out the door, but my Dad later explained to me that business is business, and negotiations can get heated, and strong words can be exchanged, and both sides screw each other over to get the best deal, but you must never let it get to be a personal thing. If my Dad had said "that guy was trying to rob me, screw us over, take me to the cleaners, and I'm never doing business with him again!", we would never have gotten the deal on the car my Dad had been fighting for.
If you want to take the slight of a friend personally, and choose not to be their friend, by all means do so. But a business transaction isn't about friendship. It's about buying and selling, and the worst mistake I see folks on either side of a transaction make is letting things get personal. When that happens one party either loses an opportunity to sell, or an opportunity to buy, which really doesn't matter a hoot to me if the failed transaction is for something I want.
You want to tell him to stick it, that's a perfectly acceptable action to take, but what does it get you? Yeah, you get your sense of self-satisfaction and pride for taking the moral high road, but unless another buyer comes along you're stuck with your pride and nothing else, and your pride isn't going to accomplish what you needed to accomplish.
This reminds me of a guy I recently met who was selling a 1974 Imperial that had been sitting in his driveway for 20 some odd years. He's an old retired railroad guy with lots of health issues, lives with 20 or so cats in an old house, and works on motorcycles as a hobby. Problem was his Imperial and an old van were blocking his access to his garage and he needed to get rid of them to make room for other efforts. Like you, he wasn't going hungry or needed money for bills, he needed space and access.
I went to look at the Imperial because it had the special heavy duty towing package with the Dana 60, and I wanted the rear out of it for my Road Runner. The car was a total basket case. The fenders, quarters, hood and trunk were totally rusted through, and he had a steel bar running from the dash to the rear of the trunk to keep the quarters from collapsing in. There had been racoons living in it for years, and the interior was filled with racoon turds and trash, and just reeked. The engine was a 440, but a 74 engine, and it's tough to give those away down here. The guy wanted $1,200 for the car, but while that would be a good price for just a B-body Dana, it was a C-body Dana that I would have to cut down and modify to fit, get new axles for, it had disk brakes so I would need 15" wheels instead of 14", so if I bought it for $1,200, I would be paying another $800+ to make it fit, which made no sense when I could get one that was the right application already for $1,200. Plus if I bought the car, I was going to have to pay a couple hundred to have it towed to my house, then rush to take it apart before my neighbors complained of the smell from the racoon turds, and then I would likely have the 440 and 727 sitting in my garage forever until I just gave them away.
So I told the guy I would give him $300 for the car, pay for the tow, and if I sold the 440, I would pay him whatever I got for it. I thought this was a fair deal because while the Dana might be worth $1,200, it would only be worth that to someone who needed one for a C-body car, and there aren't many folks restoring C bodies these days. The car itself could never be restored, and anyone else wanting to use the Dana on a different body type was going to have the same cost issues I had. Well, long story short, the owner just went ballistic about how I was trying to rip him off, take advantage of him, blah, blah, blah, and went off in a huff. I let it roll off me, and I called him a couple of days later and left a message to see where we stood, and he wouldn't even talk to me. He had a friend call me back and tell me what a chiseling cheapskate I was, and they were going to get their price for that car and they would never sell it to me at any price!
Well, that was a year ago, and that old Imperial is still sitting right where it was the first time I saw it. Apparently he never got his price, or any other buyers. He has his pride, but still doesn't have the room or access he needed, and I have a nice correct 8.75 rear in my garage, which is what I really needed instead of the Dana impulse buy.

So he let it get personal, and lost out on what he needed... so did he win? Nope.