It is a bit petty that they told the company that you were a poor candidate, but you seem to not understand what was happening. And it could have been they had already mentioned your name to them, and then had to explain why they suddenly were not representing you. I don't know, but that is a reasonable explanation.
I personally have had a mixed bag with recruiters: many I have dealt with are worthless in that they don't understand the jobs they are recruiting for (so give very bad matches to both sides), but I have been lucky twice and had recruiters give me great jobs and handle the pay negotiations so well that I probably got $20-40K/year more than I would have by myself (if I had somehow found those positions).