So really, was the dealer correct in anything other than being cautious of being caught in a potential ATF entrapment sting operation? I may not wear khakis and polo shirts, but the decades of professional gun toting are evident in my appearance and demeanor so maybe they thought I was a bearded fed.
It all depends, the ATF likes to operate under the let's show up and shoot your dog and see if we can find a reason to shoot you and then you can argue that we are wrong to the judge later.
What if one of the folks in the store was an undercover ATF agent / informant looking to pad their statistics?
In this day and age when "Law enforcement" is almost totally unaccountable for their actions and the courts are almost hostile to the citizens, sometimes you have to go out of your way to make sure there is no chance of the possibility of the appearance of doing anything the stupid government might be able to mis-interpret.
Your mileage may vary.