Keith's right -- it's apples and oranges. Lots of people go from political or diplomatic posts into private industry or education. For instance, John Danforth, a former US ambassador to the United Nations, is now a partner at a law firm, while Madeleine Albright, who held the same post and then became US Secretary of State, is now a professor at Georgetown. Are those "demotions?" No, because they're entirely separate careers.
Ambassador is an assignment, not a rank or lifelong title. People from various walks of life get appointed to various ambassadorships, do their jobs, then move on to other things. Sometimes they continue to be diplomats or policy advisors, sometimes they sit on the boards of various agencies or organizations, sometimes they join think tanks, sometimes they become professors, sometimes they go into the private sector. So if a former ambassador who came from the military wants to go back into the service, why not?