Lots of folks here can't seem to see past their affection for these characters to recognize that Riker was terribly written after "The Best of Both Worlds." This is just one instance of that awful writing. Everyone knew and acknowledged it, even Frakes. The only way to save the character was to let him leave the ship and have Frakes appear in occasional episodes while directing or kill him off in season four and replace him with Thomas Riker.
Don't think it's at all awful writing to have a character decide he doesn't need to be captain right now, prefers continuing as second in command to continue being with his current crew.
This is exactly why I dislike the crew so much in this episode. Jellico was right, he just wasn't nice. If the crew cannot or does not want to see that then maybe they're not that great.
They were a bit openly resentful but Riker was the only one who was outright defiant/insubordinate, the rest still worked their best with/for him.