Yeah, the film doesn't quite explain why he was discharged. I can't believe it would be because of the IED. Maybe they thought he was starting to "think" too much, when all they needed was someone who followed orders and went along with things (I'm thinking of the beginning scene where he posed with a dead Iraqi).

Overall I thought the film was OK, but Henry Cavill was barely in it and there was a lack of tension, despite having a fair bit of incidents.