It can be sneaky or considerate, depends when you use it. The problem with the abrupt "hanging up" button is it's binary like a car horn - there's no way to do it nicely. If you're in a meeting where you can't take the call, it's a gentle way to let the caller down.
I think you're confused about the function of the sleep button on the iPhone. When an iPhone is ringing, pressing the sleep button one time silences the ringing and vibration, but does not "hang up" the call. Pressing again, however, will "hang up" the call.
No, he agrees with you. He thinks pretending like it rang and rang without you noticing it could be considered a considerate gesture under certain circumstances.
I feel sneaky using it as opposed to declining the call, but Italy's best rule for warfare as always been "the best defense is to not be there".