raggedflyer said..
You're experience of the lead up to panic is not uncommon, whilst I've not seen or experienced this in kiting I have witnessed this during my work as a dive master. Occasionally someone may be preoccupied with all of the stressors surrounding the experience at hand, their mind is distracted from the experience and they begin to forget the basics, then make small mistakes, this increases the mental distraction and anxiety, this can cycle and build until panic overtakes. In diving we train to recognise this. Fatigue also plays a large part, if after 4 hours of lessons you're instructor takes you out of your comfort zone and into challenging conditions, perhaps that's not a good instructor.
I think you should reward yourself for recognising the signs and calling it out, that probably saved you from escalating panic.
Aside from finding a good kite school at a good location for learning, I suggest you shop for a comfortable wetsuit or try comfortable two piece, take time before the lesson to prepare, find a helmet that fits, assess if the the goggles are necessary, get a comfortable harness... do anything that removes those distractions or precursor stressors to allow you to focus solely on the experience of kite flying.
For me the waist harness I used at the beginning just distracted me from kiting, it rode up, hurt my ribs, increased the distance of the bar from my hands and detracted from the experience. I switched to a seat harness and all that went away, I focussed only on the kite and the board.
All the best!
Your description describes exactly what I experienced, literally step by step....wow! That is great advice and thank you for taking the time to explain it. I will definitely take all the advice from the comments I received from the people here.