There's no requirement that you use a passport as the form of ID at TSA screening. You can use a driver's license or something else.

The reason they want IDs handed to them is so that they can handle the ID and see if it has normal wight, texture, etc. That helps them determine if it's a fake. The same thing will happen if you get carded for age 21 in airport bar. The bartender will take your ID, look at it and give it back. If you get pulled over for speeding, the cop will take your ID, look at it and give it back.

Refusing to hand over the ID and simply holding it in front of the guy's face is inconsiderate because it prevents him from properly doing his job and slows the line up for everyone else.