What do you think of what my graduate school professor did? ethical or not?

It sounds like you have regrets which are terrible to live with. It also sounds like you now have a better sense-of-self and more confidence. You don't have to explain your personal life, problems, issues and/or extracurricular activities to the academic staff unless you choose to because they directly relate to your performance at university (which they did not). They really had no place in intervening in a situation they knew little about and making umptions. There is no shame in being caught at a vulnerable moment and making a bad decision. Don't let one bad experience deter you from pursuing your full potential at university.