JEKenny....you spent three years having fun, learning to dance many different styles, building a foundation and discovering what dances you preferred to focus on. I wouldn't consider that a waste of time.
Although you may have outgrown your first instructor....you may want to reconsider this new instructor. To me, it seems like arrogance and insensitivity that motivated his remarks about "a waste of time". Is he telling you that you are a terrible dancer? I'll bet you're not a terrible dancer, but if an instructor told me that I wasted three years...that's what I would think he is saying. I wonder if he is stroking his own ego, by criticizing you and the other instructor. An instructor with a courteous and professional manner (and genuine confidence in his own abilites) would have your best interest at heart and would not make such harsh and discouraging statements Even if you do need improvement, there are better ways to approach that....such as encouraging you to work on the things that need improvement and pointing out the things you do well.
There are so many factors that influence a dancers progress... including how often a student is able to practice, how many lessons are taken each week and even changing goals during the course of study. You mentioned that you wanted to do light, local competition when you first began dancing. So maybe you and your instructor paced your learning to meet that goal at that time, before you became more serious.
To me, it would not be worthwhile to study with an instructor that seems so arrogant and insensitive. In my area there is an instructor that is well known (in the area) and considered to be one of the best. He is almost rude to his students in the way he communicates with them. I don't find that productive. If he was as great as he thinks he is, his students would perform better at comps that the students at the other local studios. If he was as wonderful as says he is....he wouldn't let some of his newcomer and Bronze I level students show up at the comps dressed and made up like Gold competitors.
I personally would not want to waste any more time thinking about whether of not one instructor thinks I wasted the last three years of my time and money. My time with an instructor should be spent learning, not listening to his destructive commentary about other instructors....
Anyway, I'll get off my soapbox now....best of wishes to you.....follow your heart and don't let anyone determine if you have wasted your time.