I think the issue came not from the grade itself, but from what was said inmediately afterwards (the person responsible was an ONI member) claiming to be inmediately below an Admiral. Basically, a Lt or Lt-cdr was stepping on the heads of Xavier, any captain in the TSN, a lot of commanders, and some others using an Intelligence clearance.
Now, we all understand intelligence needing some secrecy, but it’s absurd to have them above their CO.