I resigned my commission in 1972 as an O-3 and was placed in the Standby Reserves. I received my Honorable Discharge on Feb 16, 1978 (same date and letter as Kerry) with no action for or against on my part and I was listed as an O-4 (LCDR). I doubt that Kerry was discharged because he was passed over. He, like myself, just went through the normal reserve administrative process, which transitions officers out of the service.
In any event, before the boys and girls who weren't even born then go charging off with this one, these possibilities need to be examined and eliminated, unless true, in which case we should all shut up about Kerry's discharge.