No, that is not correct. The two pair rule is implemented because the casino wants to have the highest low hand possible without sacrificing too much power in the high hand. While not specified in some house ways, the rule should say (in your case) to "play the low pair on top", or "split the pairs" as per the two pair rule. That's it… in most house ways I've read, it does not go on to say "play a high pair in the five-card hand". Because the rule is to play the low pair in the low hand (or simply split the pairs), the remaining five cards speak for themselves, just as they would in Poker or Blackjack. A dealer or player does not get to call the high hand a pair of Aces just because they want to, just like a Blackjack player cannot say his hand consisting of three aces equals 23 or 33 and demand the hand be treated as a bust.
Having said this, some house ways say to play "pair-pair" when the high pair is aces… or something to that effect. This can leave the rules about the joker up to interpretation. You'd have a legitimate argument if you decided to argue with a dealer or floor supervisor on this. However, I have been told that the two pair rule is technically not in effect because the joker is not actually an ace, even though it can be treated as one. I don't know how much of that I believe, or actually makes sense. I will say that whenever I've seen a situation like yours, the house always played the straight in the back. After all, if you requested that the casino set your hand the house way, do you think they would get away with taking your money if you lost because the casino called your high hand a pair of aces instead of a straight? I don't think so.
The dealer most likely made a mistake.