Really? saving a princess from bandits is an achievement deserving an S rank? I mean B or A sure, but S? Just how low is the standard there. Also how tf nobody questioning about King's decision? bro literally just giving away S rank to some random ass mage.
I'd imagine it has more to do with the
method by which he saved her. They seemed pretty impressed by the various magics he put into use, and by the fact that he could also heal. Add onto that the fact that he was trained by essentially a legendary hero mage (they did mention hearing that the legendary mage had an apprentice, and they haven't really had reason to doubt his claim), that he used to be the top mage of another country, and that he rescued royalty (something that the king was ready to straight up give him nobility for), and it doesn't seem too far-fetched.
As for not questioning the decision, I'd imagine it's a mix of the king actually
informing people present with regards to his decision making process, and the usual acceptance of autocratic whims.