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Using a Compressor in Tracking

My band just went to a studio and the engineer wanted to put a compressor between my guitar players guitar and amp. The song we were recording has some pretty major changes in dynamics and feel and the compressor was making the guitar sound to flat.

When I asked the engineer to take it off he spent 15 lecturing me on how compressors are used how loudness wars are making music sound bad and other stuff Ive heard many times before. :mad:

Is it common to place a compressor between a guitar and an amp when recording in studios? When I asked him to remove it he looked at me like I had lobsters crawling out of my ears.
 
I wouldn't use one there unless it was an effect for a particular guitar sound. Something like a funk thing where you want that splatty sound. I really want to tell you to run away from that "engineer" as fast as possible. Any time a guy starts ranting about loudness wars and then wants to add a compressor!?!? there's an issue. Compressors are the main component in "loudness wars" and adding them to the front end of a guitar is not going to help in any way.
 
It's fairly common to track with compression, especially with bass. But I've only ever heard of it between the mic (or DI box) and the recorder. Not between the guitar and amp. That's very strange.