I have to agree with the others, the first sign to me that your dog shouldn't be studded quite yet wasn't you or your dog, it was the people asking for his services. The fact that he's a wash-out doesn't mean much, he might still have more drive than your average dog, just not enough for police work. But its the people asking to have a puppy be their stud. They're the kinds of people that base the breeding on the looks of the two dogs.
If you purchased him that early from another person and he already had people lined up, how did they even know what his temperament would be like at that age. It takes 3 to 4 years for a male GSD to fully mature and finally settle into their personality. There are just so many questions about a GSD at that age that its ridiculous for anyone with any knowledge of breeding to already be asking for a stud. Even breeders who hold back puppies for future studs don't know if that dog is going to turn out until they are almost 2 years old.