"so if the cop is ignorant in matters of currency"
Well, they always tell us plain citizens that "ignorance of the law is no excuse." I am certain that the same test, more stringently applied, will be used on a police officer.
When you arrest someone, you are depriving them of their freedom, which should not be done without a very good cause. To make matters worse, the man was publically humiliated by the actions of the store personnel and more importantly the police. He was handcuffed to a pole? In the open view of the public? You can't place a dollar amount on the reputation damages inflicted on him.
I hope he gets a good attorney and attempts to get this heard in a Federal Court. I don't go in for the ACLU's nonsense and don't want to sound like them, but in this case, this man's civil rights were violated. There just isn't any excuse for this type of behavior on the part of law enforcement. The store is especially going to be toast.
The only thing I can see that might act as a mitigating factor regarding the store & police action is that this man intentionally used 2 dollar bills to force the clerk to count out a large sum of money, and it was obvious he was angry at the store for a charge he didn't believe he owed. It could be argued that he was acting in a hostile manner and provoked an incident by his actions. I wouldn't agree with this position, but I can see how a jury might.
I agree with your statements, but remember that no matter what we believe, this must still be decided by a jury. I would lean to a heavy verdict in his favor, but often, the police do get a break from juries. Time will tell.