There is a legitimate reason why an agent representing an REO listing would suggest that you allow him to double end the deal. It can sometimes speed up the process slightly because the listing agent should be able to help you write an offer that the bank can accept without a flurry of counter offers flying back and forth.
However, based upon what you have shared here it sounds like the actual reason the agent is behaving this way has more to do with protecting his interests than it might with protecting yours. As a Realtor you are not allowed to act in a manner that puts the agent's interests above that of their client. I also don't remember being allowed to insist that ANYONE work with me, under any circumstances. That just seems fishy to me.
As for the length of time elapsed thus far, while REO's have slightly fewer hoops to jump through than Short Sale's do, they are by no means speedy transactions from initial offer to acceptance. After the offer is accepted, in writing however, things can and do tend to move with the speed of light.
Good luck with your transaction. I will hold good thoughts for you.
Tisza Major-Posner, Realtor, Keller Williams (909) 837-8922