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From my 1 experience (which was at a gun show), the dealer didn't accept my C&R FFL but he ate the fee for the background check that HE wanted to do anyway. I'd probably do the same thing if I were in his place.
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I have to ask why? You presented a C & R License in your name, and had your ID showing the same address as the license showed? So, unless he didn't know anything about firearms licenses, he'd know you went through a background check to get the license. It's about the same as the states that allow concealed carry license holders to by-pass a background check.
Would he require a background check from a fellow Class 1 FFL holder? I doubt it very much.