Hi Guarav,
Thanks for your feedback. Identity Toolkit is working here as intended. What you are seeing is the result of two design decisions.
1) Prompting for the email before providing different login options.
From our user experience research, we've concluded that it helps to identify the user first. Once the user gives us their email, we know if they are a new user, an old id/password user, or have previously logged in with an Identity Provider. Our approach improves the UX because a user no longer has to remember how they've authenticated for your site on a previous visit.
2) Automatically redirecting @gmail account to Google sign-in.
Google sign-in provides what we call "fast email verification". With other Identity Providers, e.g. Facebook, the user has to give your app permission to view your email, even though you gave it to them before. In general, permissions are confusing to users, and it isn't always clear what access the app will have to their profile. Google sign-in doesn't require permissions for already public information, and therefore provides a better experience. We will provide this feature for other Identity Providers once they implement the same "fast email verification" protocol - something we are currently pushing as an industry standard.
I apologize if you disagree with this behavior, and would be happy to take this offline to hear more about your opinions here. Online identity is a hard problem - the current design of Identity Toolkit represents the best solution we've found thus far.