The very fact that the teacher allowed students to choose what they wanted to read, rather than the books that the teacher him/herself liked (which was the unfortunate case for me), is wonderful. Had I been afforded such a situation, it probably wouldn't have taken me 10 years (after High School) to finally enjoy reading for myself.
And the fact that the teacher saw the flaw with the test and appreciated what you wrote. A teacher/professor who is unwilling to be wrong is the most dangerous kind there is. This teacher clearly was not one of those.
On the other hand you're not doing your students any favours if you let them only read the stuff they're interested in; or rather, the stuff they think they're interested in at the age of twelve. Gotta force them to broaden their horizons and read something else once in a while or they'll become... well, the kind of adults who only read science fiction.
Given that every great science fiction novel I've read is an essay on either how good the human race could be (often with some instructions) or how bad the human race could be (often with steps from here to there outlined), I think there are far worse things than being an adult who reads only SciFi.
Similar arguments hold for most forms of fiction, which is why I'm always unimpressed with people who don't read fiction because they "only want to read things that will help them grow". The fiction I've read has provided more avenues for personal growth than almost all non-fiction I've read.
The horror indeed, for what should we do when we see these dastardly creatures? Should we wave pitchforks, or just ring the church bells to warn others, while we cower inside and pray?