I'm no fan of being asked to orbit either, but I've been asked on a fair number of occasions at both civil and military airfields. Inside class D, where the controller should know were everything is, it shouldn't be inherently dangerous - but on the other hand the recent C150 fatality at Southend shows that it can be.
I can think of an occasion where I was asked to orbit, for example, for an aircraft on the ILS WITH A FUEL EMERGENCY, but then it was much larger than me so I declined a subsequent instruction to stop orbiting and rejoin base - because I'd not have adequate safe separation. My point here is that any ATC instruction has to be accepted - within the rules of the air of course. If you are asked to do something that you consider dangerous, then decline it and say why.
Incidentally, can you offer a little more detail about your particular incident. What class of airspace? What level of service?
G