Here's what I'd have done...
Speaking as a R22/R44 driver (with the luxury of all the time in the world to ponder this one) my thoughts run thus:
Were I full of passengers and unfamiliar with the airfield, I think I'd have elected for a standard join, especially in a 20kt wind. If I was a bit lighter AND I knew there was plenty of room to make a fast (minimum 55kts IAS) downwind approach before bending it impressively round the corner and into wind for the final transition to the hover, I'd have accepted the controller's instruction with glee.
I guess the 'correct procedure' ultimately depends on a mix of aircraft performance, pilot confidence/ability and weather. I'd say the controller's instruction was not unreasonable, but for any low time pilots reading this I'd add: Remember, you're the captain. Don't accept an instruction you are uncomfortable with, particularly if there's a reasonable alternative; like joining the fixed-wing circuit.
All that said, helicopters joining the circuit is not without its own perils. I was once refused a straight in, into wind approach at Newcastle, UK, (a manoeuvre that would have combined maximum aerodynamic safety with minimal delay to the many departing airliners IMHO) and required instead to join downwind to await a 757 on long long final. I was flying an R22. Having flown for a full four minutes downwind the 757 duly appeared a couple of miles ahead. The controller then gave me 'No 2 to land behind the 757 - keep it tight'
Remembering my turbulence training, I can tell you that keeping it tight was the last thing I was going to do. I gave that big bird a wide birth, climbed to avoid the wingtip rollers I now saw reeling toward me as I flew base leg behind him, and stayed well above his glideslope all the way back to the field. This was at least made easy given my runway exit/aiming point was most of the way toward the far end of the runway (where I'd wanted to go in the first place), but I could sense the captains of all those airliners queued up to depart cursing me as I crossed the threshold a full 600ft above them, plodding slowly as only an R22 can in a crosswind. Total added/circuit time was 10mins, and I still had to bend it 90deg right in the last few feet to bring it to a stable into-wind hover.
Still, t'was all good experience, says I. Just don't go believing too many controllers understand helicopters.