It's possible that, in Canada, a Canadian passport is not an acceptable proof of citizenship; therefore, the consular rep assummed that the same goes for America.
Either that or the office was asking for proof of Canadian citizenship. I don't see why they would care about their US citizenship status if they were applying for a Canadian certificate. The equivalent would be for a US immigration officer asking to see proof of foreign citizenship when applying for an N-600;there would be no reason to ask for it, unless I'm missing something. Perhaps JACKKmon can clarify.