Completely agreed. If they betrayed your trust once, they will do it again.
I worked at a headhunting firm for two years, and ethics are a difficult thing in the industry, because it is cutthroat competition, and it's generally results-based, most headhunters draw most of their income from commission, not salary.
That said, as others have said, they have shown they cannot be trusted. The firm I worked for was extremely honest and reputable, in that case I would have suggested to you how to change your resume, but the fact that he outright doctored your resume should be shocking...but it isn't. Some people prefer to work with headhunters, a lot of Slashdotters take a derisive tone with them. If you do like it, then when you find an honest recruiter...stick with him. We placed a guy 5 years ago in a job about 2 hours away, who was on a green card. Once he got US citizenship, he quit and called us to ask us to find something. Even if a tough market, because of their history and the knowledge our recruiter had of the guys skills, he found him a job close to home, although he did have to take a small pay cut. Recruiters can be your friend.