We also can't really take that seriously because it was a Q created reality. He likely made him such a low rank to drive the point home.
That's not consistent with what Q said or Picard's reaction to it. Plus for Picard to believe it, it has to correspond with his own long experience of Starfleet and their ranking habits. Otherwise, Picard would have called Q on it. As I said ¨Picard is a veteran of Starfleet, he's been a member of it for many decades. He knows what's plausible and what isn't.